Monthly Archives: October 2010

Phyllis Shelton Challenges ABC Special on Alzheimer’s

From LTC Expert Blog, Valerie Van Booven
We love Phyllis Shelton. She is hands down the best authority on long-term care insurance PERIOD. Don’t miss this press release.

October 17, 2010 episode of This Week with Christiane Amanpour erroneously states there is no insurance or national strategy for funding the care of Alzheimer’s patients.

NASHVILLE – Guests Maria Shriver (First Lady-California) and Ann O’Leary (Berkeley Center for Health, Economic and Family Security) appeared yesterday to introduce The Shriver Report™: A Woman’s Nation takes on Alzheimer’s on the ABC Sunday morning show This Week with Christiane Amanpour. In highlighting the immense problem with funding caregivers for Alzheimer’s patients, Ann O’Leary states “we estimate families are spending $56,000 a year paying out-of-pocket and we don’t have any insurance for this”. Christiane Amanpour voiced the opinion that the United States is the only developed country without a national strategy.

Phyllis Shelton, President of LTC Consultants, a 19 year old company specializing in educating Americans to plan for long-term care, disagrees.  “While I commend Maria Shriver and Ann O’Leary for focusing a national spotlight on this critical issue, it is incorrect to say there is no insurance to fund caregiving for Alzheimer’s or that the U.S. has no national strategy.” she says. “We have wonderful insurance for Alzheimer’s and we do have a national strategy to pay for Alzheimer’s related expenses and other conditions that require long-term care. Almost all states have implemented public-private Partnership plans that ensure that the private sector pays first and Medicaid pays last for extended caregiving. Some benefits are cash so families can spend it however it is needed. If insurance isn’t enough, the insured can turn to Medicaid for unlimited benefits without spending down most assets. Further, the Partnership for Long-Term Care is a proven strategy. In the four states that have piloted this concept since the early 1990’s, the Partnership directors will tell you that fewer than 500 policyholders out of over 325,000 have had to access Medicaid after using their Partnership insurance plan first. We need this Partnership because there’s no way that public dollars alone can pay the $20 trillion over the next 40 years for Alzheimer’s treatment as this program suggests, in addition to the 16 million younger adults being added to the Medicaid rolls by health care reform, beginning 1/1/14.”

Shelton says the reason most Americans do not know about this solution is because 2006 legislation made it possible for the majority of states to implement it in the last three years, and states do not have the money to educate the public about it. “However, we do have to do something very different than we have been doing.” she said. “The time for selling this insurance just one person at a time is over. The only way this will work as fast as necessary to take the burden off state budgets by 2050 is for employers to offer voluntary public-private Partnership plans NOW to employees 18 and up with limited underwriting. That way, most employees and their spouses can qualify. A 25 year old can get a good plan with inflation coverage for less than a latte a day.”

With the help of four insurance companies (MedAmerica, OneAmerica, Prudential and United of Omaha), Shelton is conducting a seven-city tour to teach financial professionals how to help employers easily offer the public-private Partnership plans. “The CLASS Act in the health care reform legislation is trying to do this but the benefits are structured wrong. It has a low daily benefit with inadequate growth for inflation and an unlimited benefit payout. Those who understand Medicaid know that if the person can’t make up the difference between the benefit and the charge at claim time, he or she spends personal resources quickly and goes on Medicaid right away. The better path is to have a higher daily or monthly benefit with 5% compound inflation and a shorter benefit period so that insurance has a chance to pay at least the first two or three years of care. That would be enough to keep most of the 80 million baby boomers off Medicaid for long-term care and free up public dollars to pay for Alzheimer’s research.”

The training also covers how to help older Americans enjoy a new tax incentive that allows gain from annuities to be distributed tax-free for qualified long-term care.

Shelton further explained she has a family member with Alzheimer’s whose cash long-term care insurance benefit of $5,100 started last month for the rest of his life.  “He has paid $18,090 in premium since 1993 which he will get back in 3.5 months. His premium is waived and his benefit is guaranteed to increase at 5% compound each year. Words can’t express the relief his wife is experiencing right now when those checks come in.”

She agrees with Ms. Shriver and Ms. O’Leary that national productivity is headed for a steep decline since women make up half of the U.S. workforce and are at great risk of losing careers and personal lifestyle choices when faced with the caregiving tsunami that will be brought by the baby boomers over the next forty years.

About Phyllis Shelton:
Shelton is the author of three books and has been featured in a full-page story in the Wall St. Journal and Newsweek in addition to a PBS documentary on caregiving, CNNfn and National Public Radio. Her 2010 interviews include “The Balancing Act” on the Lifetime Television Network to address the impact of long-term care on women. Over 65,000 financial professionals have experienced her firm’s live or web-based training and she has had training contracts with half of the top 15 insurance companies that sell long-term care insurance. Her firm delivered the 2,020 employee education meetings that launched the Federal LTC Insurance Program. Her consulting business model includes assisting states with an educational outreach about the Long-Term Care Partnership, a program that shelters assets from Medicaid means-testing equal to the benefits paid by Partnership long-term care insurance plans. She has helped Blue Cross Blue Shield of Tennessee’s health insurance brokers offer long-term care insurance through employer-sponsored plans since 2005 to achieve extraordinary participation from employees of all ages in order to train financial professionals nationwide how to achieve the same results.
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Posted by on October 27, 2010 in Uncategorized


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Lower Cost HECM Means Better Suited For Short Term Goals

Cash at Home: Two recent government moves could make reverse mortgages cheaper and easier for older homeowners to understand. The loans, which generally let people 62 or older convert their home equity into cash, traditionally have had high closing costs and have been most useful for people planning to stay in their homes for the long haul. But a new federally backed product, the HECM (Home Equity Conversion Mortgage) Saver, has cut the upfront mortgage-insurance premium to 0.1% from 2% of the property’s value. The change makes the product better for people with short-term needs, says Barbara Stucki, vice president of home-equity initiatives for the National Council on Aging, a Washington, D.C., advocacy group.

Also last month, the Department of Housing and Urban Development began requiring all HUD-approved reverse-mortgage counselors to give their clients the aging council’s 28-page consumer booklet on reverse mortgages, walk them through a new “Financial Interview Tool,” and offer to see what other assistance might be available using the council’s BenefitsCheckUp program ( ).

To learn more, see the aging council’s booklet “Use Your Home to Stay at Home,” at

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Posted by on October 26, 2010 in Uncategorized


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“HECM Saver”: New option lowers Reverse Mortgage costs AGAIN!!

If you have been toying with the idea of taking out a reverse mortgage, note that the market today is significantly different from what it was just a couple of months ago.

Monthly insurance premiums on new loans went up last week, making an expensive product even more so. But the Department of Housing and Urban Development has offset that rise by introducing another reverse mortgage — the Home Equity Conversion Mortgage Saver — which slashes the upfront cost.

“It’s a mixed bag,” says David Certner, legislative policy director for AARP, of the reverse mortgage market.

A reverse mortgage is suited for older homeowners who have lots of equity built up in their home, but little cash and no other ways to increase their income. The amount you can borrow is tied to your age — you must be at least 62 — the value of your home and the interest rate. And you can get the money in a lump sum, monthly payment, line of credit or any combination of these.

Unlike a traditional mortgage, you don’t make monthly repayments with a reverse mortgage. Instead, the principal, interest and fees add up month to month. The loan is repaid when you sell the house, move out or die.

High fees have been a major drawback of reverse mortgages. With these loans, you have many of the same expenses you do with any mortgage, such as an appraisal. On top of that, the origination fee on a reverse mortgage can be up to $6,000.

You also must pay a monthly mortgage insurance premium for reverse mortgages that are federally insured, which is almost all them. This insurance protects lenders in case a house ends up being worth less than the amount borrowed and covers borrowers in case a lender fails.

That monthly insurance premium last week for new loans went from an annual rate of 0.5 percent on balance to 1.25 percent. This was raised to protect the government — and ultimately taxpayers — from having to make big payouts to lenders because of falling house prices, Certner says.

The new HECM Saver reverse mortgage offers some relief, though, by substantially cutting one of the upfront fees.

With the standard reverse mortgage, borrowers must pay an upfront insurance premium worth 2 percent of the value of the property, up to a certain limit. That’s $4,000 on a $200,000 house.

The Saver loan’s upfront premium is 0.01 percent, or $20 on that same home.

With current losses in senior equity retirement accounts (IRA’s, 401k’s) since 2007, this latest revision by HUD should be greatly received by many seniors and their financial advisers,  as a solution to supplementing depleted retirement funds at greatly reduced costs.

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Posted by on October 19, 2010 in Uncategorized


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It Takes A Village: A Seamless Support Option for Staying in Your Own Home

Grandfather and granddaughter walking a dog in a parkA new aging-in-place trend is sweeping the country. Now it is not only desirable but also possible for people to continue to live at home and acquire the support they need from neighbors and organized care options. These up-and-coming organizations are known as villages, and they encourage independence and support for seniors.

The philosophy behind a village is that everyone in the neighborhood or community wants the same things: to live independently, to have reliable services nearby and to be able to locate trusted assistance when they need it.

Why now?

According to the U.S. Census Bureau, the number of Americans 65 and older is expected to more than double to 89 million by 2050. Nursing homes or assisted living facilities are not expected to be able to handle that volume.

Moreover, AARP research shows that the majority of people want to grow old in their own homes, in the community they know. Modeled after the groundbreaking Beacon Hill Village in Boston (the first of its kind), villages provide an excellent aging-in-place alternative to assisted care facilities.

The idea has caught on; a recent article in USA Today revealed that in the past two years, more neighborhood villages have cropped up around the country than during any other time in history.

How does it work?

In a village organization, each family remains separate and in their own homes but are unified by way of formal community coordination. A typical village is run by the members themselves, who pay dues and take advantage of a smorgasbord of services offered by community volunteers or by a company for a fee.

It is not unusual for younger members to provide services for older members; sharing the workload begins with a community-based mindset.

This membership-driven community idea enables residents to stay in their neighborhoods as they age because help is just a neighbor away.

Organized programs might include health and wellness programs, and social or educational activities. Vetted providers offer services such as:

  • transportation
  • grocery delivery
  • dog walking and pet care
  • home repair
  • assistance with medical or legal paperwork
  • gardening and yard maintenance
  • computer and technology help

Being able to rely on these services allows residents to lead safe, healthy, productive lives in their own homes. When in-home care is needed, the well-connected residents have resources at their fingertips.

How to find or form a village

An estimated 50 villages have sprung up across the country since the turn of the century. In some cases, Area Agencies on Aging create programs based on the needs of a particular community group.

These unique villages are consumer-driven and consumer-run, tapping into available local services. Most are non-profits that exist only to serve residents. An Internet search for keywords such as “senior community village,” “naturally occurring retirement communities” and “continuing care retirement community” will yield a list of organizations to start with.

There is even an organization that will help a neighborhood organize and form a village. The Village to Village Network helps communities establish and manage their own villages.

Village living enables the independence seniors seek by supplying the resources they need.

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Posted by on October 17, 2010 in Uncategorized


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Helping Seniors Stay Put: Building Homes to Age In

by Jennifer Ludden (Last in a four-part series)
August 24, 2010

As Americans live longer than ever, some will find it difficult to stay in their beloved homes: Steep stairs or a slippery shower can pose dangers, and standard houses are not wheelchair accessible. One solution? With 78 million baby boomers about to hit retirement age, some say the time is ripe to overhaul the way homes are designed.

This movement is already helping 82-year-old Jim Waggoner.

He has lived in a Veterans Administration nursing home in Tampa, Fla., for 13 years, since cancer in his back and spine left him in a wheelchair. A lifelong bachelor, Waggoner figured he’d die in this institution. But then he hit it off with a nurse at the nearby VA hospital. Jim and Cheryl got married last year and wanted a cozy place to live.

“We had nothing to go on until we got our home,” Jim says.

“We had discussed just remodeling my place,” Cheryl says, “but there would have been too much to do. We would have had to have taken everything down, all the walls, the works.”

It’s a common problem — and an expensive one. Making a home accessible can cost tens of thousands of dollars. So Cheryl went online, and that’s where she discovered the kind of homes Keith Collins is building.

Explore A Universal Design Home

Imagine building a house when you’re young that you can live in as you age.

Collins brings a personal passion to homebuilding. He spent time in a wheelchair after serving in Vietnam and sees overlap between the needs of injured veterans and the elderly. Florida, as it happens, has a lot of both. Collins explains that his company, New Millennial Homes, uses what’s called universal design.

“The design allows a person to remain independent and keep their dignity,” he says.

Custom-Made Homes

Collins tailored the Waggoners’ white ranch house to make life easier for them.

The mailbox is low enough for Jim to collect the mail in his wheelchair. There are no steps — just flat entries — and doorways are wide. All door handles are levers: Collins says a large share of seniors lose some dexterity, making it more difficult to turn traditional knobs.

In the kitchen, Collins points out the open space under the sink. That’s to allow someone to do dishes while sitting, either in a wheelchair or on a stool, for rest. Even the wood in the walls is tailored: 2-by-8s instead of 2-by-4s. That lets the builder pop in a grab bar without ripping out the wall — and that saves money. Collins is adamant about building for the middle class.

“If you do it right from the beginning,” he says, “it would normally cost you no more or very little compared in cost to any other conventional home.”

The price tag for the Waggoners’ house is $171,000.

Collins is also proud that his homes look like any other. He says he loves it when people walk in and ask, “Where’s the handicapped house?” In fact, some of his features designed for accessibility are commonly found in glossy kitchen magazines: shelves that pull out like drawers, for example, and a faucet over the stove, to avoid having to lug a heavy pot of water from the sink. Aging experts say this crossover appeal is essential.

“We absolutely recognize that if these are pitched as they help you when you’re old, that’s a recipe for disaster,” says Elinor Ginzler of AARP.

She’d like to see boomers plan ahead and buy a home with universal design now or use it for that kitchen renovation. But here’s the problem: No one ever thinks they’ll need such accommodations.

“We have polled people to ask them about the whole concept of what is old,” Ginzler says. “And no matter what decade they are in, they believe that old is the next decade. And if you’re even in your 80s, old is in your 90s.”

Universal Design Has Broader Appeal

So advocates — and builders like Keith Collins — are trying to broaden the appeal. Those flat entries and wide doors? They’re great for moms with strollers. Lever door handles? They’re so convenient if your arms are full of groceries.

New Millennial Homes designed this ranch house for Jim and Cheryl Waggoner in Tampa Bay, Fla. 

Enlarge Jennifer Ludden/NPRNew Millennial Homes designed this ranch house for Jim and Cheryl Waggoner in Tampa Bay, Fla. Because its universal design features were planned at inception, the cost — $171,000 — is about the same as a traditional house. This photo captures the house in its final stage of construction earlier this summer. They have since moved in. 

Jennifer Ludden/NPRNew Millennial Homes designed this ranch house for Jim and Cheryl Waggoner in Tampa Bay, Fla. Because its universal design features were planned at inception, the cost — $171,000 — is about the same as a traditional house. This photo captures the house in its final stage of construction earlier this summer. They have since moved in. 

Some communities aren’t leaving it to the marketplace. In recent years, dozens of states and localities have passed laws promoting aspects of universal design. In part, that’s because a lot of money is at stake. Medicaid and Medicare pay for a huge chunk of nursing home costs. AARP’s Ginzler says the fewer people that must move into nursing homes, the more public money these states and cities save.

“Sometimes they pass a stick,” she says, “and sometimes they pass a carrot. An example of a carrot is that they would say to builders, ‘You’ll have an expedited building permit process if you design your home to have these features in it.’ ”

For Jim Waggoner, moving out of a nursing home and into his own house, at last, simply means freedom. It gives him “the ability to do what I want, when I want and how I want — and not have somebody tell me that I can’t do that, or can’t do this,” he says.

It’s a privilege millions of Americans don’t want to lose just because they’re older.

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Posted by on October 16, 2010 in Uncategorized


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Reverse mortgage safe from plunging home value

Given the downturn in home prices, some seniors who took out reverse mortgages – especially in places like Florida, Arizona and California – are now upside down, or owe more than their homes are worth.

But in the topsy-turvy world of reverse mortgages, being upside down has almost no downside.

Dale Milfay of San Francisco says her 86-year-old mother, Florence, took out a reverse mortgage on her home in Cape Coral, Fla., about four years ago.

At that time the home was appraised for $260,000. Florence qualified for a $160,000 reverse mortgage guaranteed by the Federal Housing Administration.

This type of loan, known as a home equity conversion mortgage, lets seniors 62 and older borrow against the equity in their home without making monthly loan payments. Interest costs and an annual mortgage insurance premium are added to the principal.

The loan balance doesn’t have to be repaid until the borrower dies, sells the house, or moves out for more than 12 months. At that point, if proceeds from the sale of the home fall short of the loan balance, the FHA insurance fund – not the borrower or heirs – pays the lender the difference.

Borrowers can take their reverse loan proceeds in a lump sum, fixed monthly payments, a line of credit or some combination thereof.

Many borrowers take the lump sum because they are paying off a standard mortgage.

Milfay says that because her mom’s home had been paid off, she opted to take monthly payments of $500 for as long as she lives in the home and put the rest into a home equity line of credit, which she taps occasionally for home repairs and vacations.

Each monthly payment, and anything taken from the credit line, is added to the loan balance. Interest is charged only on the unpaid balance, not the untapped credit line. The unused credit line grows at a certain interest rate, so the longer it’s left untouched, the bigger it gets.

Today, Florence’s loan balance is about $75,000, and she has about $105,000 remaining in her line of credit.

But the value of her home has fallen to roughly $80,000.

Milfay asks, “Does she have the right now to take the remainder of her equity as a lump sum while remaining in the house?” Even though her loan balance will soon exceed the home’s value, “it seems to me that since she pays for FHA insurance, she has the right to the rest of the money. Am I right or wrong?”

Milfay is right.

“She can absolutely take out that $105,000,” says Susanna Montezemolo, a vice president with the Center for Responsible Lending.

That would bring her loan balance to almost $200,000. “If the house sells for $80,000, she does not owe the difference. That’s what the insurance pool is for. One of the great features of these reverse mortgages is that the borrower never owes more than the house is sold for,” Montezemolo says. “Borrowers never have to worry whether they are underwater or not.”

Whether she should is a tougher question.

If she knew she might die soon or move into a nursing home, she could take out $105,000, put it in a bank account or money market fund and use it to pay her expenses and leave the rest to her heirs.

The interest rate she earns on her savings will be far less than the interest rate on the bigger loan balance, but if she dies soon or moves out and her home is sold within 12 months to pay off the loan, it wouldn’t matter how much interest was added. Barring an explosive recovery in housing prices, she would still owe more than the home is worth and the government would pay the difference.

On the other hand, if Florence expected to stay in the home for many more years, it might make sense to let the credit line continue to grow. That way, if she needed more money later, she would have it.

“I usually encourage people to wait as long as possible to take it out because the longer you wait, the more you can take out,” Montezemolo says.

No matter what happens to the home’s value, she will always be able to take out whatever remains on her equity line. “The lender must honor the mortgage contract as originally written,” says FHA spokesman Lemar Wooley.

David Certner, AARP’s legislative policy director, says that borrowing money at a higher rate and investing it at a lower rate is “a guaranteed losing strategy.” The only advantage of taking the money out now is that “if she should have a heart attack and die tomorrow, her heirs could not take out any credit line that she had not exhausted, but they could inherit a money market account that she had stashed away.”

The reverse loan is non-recourse, which means neither the lender nor the government can come after the borrower’s other assets, nor the borrower’s heirs’ assets, for any unpaid balance.

Because every situation is different, Florence should check with a financial adviser before making any decisions.

Not surprisingly, “The decline in house prices has adversely affected the projected credit performance” of FHA-insured reverse mortgages, the Obama administration noted in its proposed fiscal 2011 budget. To shore up the program, the FHA recently announced changes designed to reduce risk and increase annual mortgage insurance premiums. To read about these changes, see my Sept. 23 column at

Higher limits extended: In other mortgage news, Congress passed a continuing resolution last week that includes a provision to extend through September 2011 the conforming loan limit of $729,750 for high-cost areas, including many in California. These are the maximum loan limits for mortgages on single-family homes insured by Fannie Mae, Freddie Mac and the FHA. The higher limits were set to expire at year end. The limits do not apply to reverse mortgages, which have their own set of limits.

Contact Larry Benton CSA for more senior finance information
Permission by Kathleen Pender at Read her blog at
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Posted by on October 13, 2010 in Uncategorized


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History Is Made: Seniors Outnumber Teens in Workforce

Senior butcher“It’s good news and bad news depending on the perspective you’re looking from,” says Mary Hladio, president of the Cincinnati-based Ember Carriers, a workplace/workforce management firm that helps mid-sized manufacturing firms with succession plans. “My clients are sticking around longer — they’re 69- and 70-years old and they’re vibrant, but they’re thinking they want to eventually retire.”

But they don’t. At least, not at the rate and age of previous generations. Government estimates show 6.6 million people over the age of 65 worked or looked for work in the first six months of 2010, compared to 5.9 million 16- to 19-year-olds.

“I think a couple of things are happening,” Hladio tells Selling to Seniors. “The Baby Boomers are getting older and we’re seeing the effects of them hitting the market in larger numbers; it also means that Americans are working longer before retiring because they’re living longer and they have the ability to live a fuller life.”

They’re also keeping their careers because “the economy took a hit on their portfolio and they have to work to supplement their income,” she says. “The good news for employers is that they’re going to have someone who is going to show up and be productive and reliable, as opposed to hiring a teenager.”

Employers are actively seeking to retain their older employees just for those reasons, says Steve Isaac, CEO of EducationDynamics. And one way they do that is to pay for higher education for seniors. EducationDynamics is a higher learning marketing company based in Hoboken, N.J.

“We’ve seen a rise in companies investing in current employees,” says Isaac, citing an EducationDynamics survey that revealed some 80 percent of New York companies are paying for employees to get advanced degrees.

“In the past we saw people jumping from job to job to pursue higher salaries and new opportunities,” he tells STS. “Tuition reimbursement not only fosters a more intelligent work force, but a more loyal one. With the support of their companies, these employees will hone their skills and remain in their current positions for longer. It is an investment.”

Teens lose jobs in 100s of thousands

Older employees “bring a wealth of history that you can’t get anywhere else,” says Hladio. “The bad news for seniors is that because they have this wealth of knowledge they tend to command higher compensation. [Employers] have to answer the question, do I bring the college student in at an entry level salary or do I pay for this 25-year history that [a senior] has?”

The competition between seniors and teens isn’t just for higher-compensating white-collar jobs. The government reports that from 2000 to 2009, teens in food preparation — typically an entry-level, minimum-wage occupation — lost 242,000 jobs while workers over 55 gained 128,000 jobs.

Similarly, in sales and related fields, teens lost 532,000 jobs while Boomers and seniors gained 822,000. And in the better-paying, more career-oriented fields of office and administrative, teens lost 553,000 jobs while seniors gained more than a million, at 1,091,000.

Info: Ember Carriers is at EducationDynamics is at To see the report from the Bureau of Labor Statistics, see

For additional senior information about retirement financing using a US Government guaranteed Reverse Mortgage, you may reach Larry Benton at 877.805.2905 or


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