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Even State Legislatures Look to HECM as Recommendation…

shutterstock_Money under lock & key 49213123State Campaign Points to Importance of Reverse Mortgages in Long Term Care

 

March 17th, 2014  |  by Elizabeth Ecker Published in News, Retirement, Reverse Mortgage

A state and federal initiative launched in 2012 has resulted in a report to lawmakers on long term care financing including the use of reverse mortgages to help Americans fund longevity.

The Own Your Future initiative in Minnesota was launched in 2012 to make recommendations to state and federal lawmakers on paying for long term care. Between 2005 and 2009, 26 states each sponsored Own Your Future campaigns to educate their residents about long term care challenges and make them aware of options and planning methods.

In Minnesota, the campaign was expanded to include an ongoing public awareness campaign throughout the state; efforts to make more affordable and suitable long-term care products available to Minnesota’s middle-income households; and evaluation of possible changes to Medical Assistance (MA) to better align with and encourage private payment for long-term care.

Among the recommendations developed by the state initiative: the use of reverse mortgages. An advisory panel has accepted the recommendations of the subcommittee with a separate set of recommendations having been sent to Congress.

“The Lieutenant Governor [Prettner Solon] has assured us that now that the report is out, it’s not a report that sits on the shelf. Action will be taken,” says Beth Paterson, a Minnesota originator who was appointed by the state’s governor to serve as the reverse mortgage representative on the advisory panel.

The report covers 11 recommendations, narrowed down from 16 that were considered, toward solving long term care funding problems for older Americans.

“The current long-term care financing marketplace consists of insurance products, home equity options  such as reverse mortgages, and health and retirement savings plans,’ the report states. “None of these products has seen widespread use recently due to a number of factors, including the perception of their stability, their safety and their benefit levels.”

Specific to the reverse mortgage market, the report indicates, are public perception challenges that are making it even more difficult for reverse mortgages to gain a place in the long-term care conversation.

“The market for reverse mortgages (RMs) is likewise in a difficult position,” the report writes.”Recently, state and federal  agencies have changed regulations governing the program to address consumer issues with the program, but the perception persists that RMs, as currently constituted, do not have adequate consumer protections.”

Advocates have developed action items for helping the perception around and access to reverse mortgages among Minnesotans.

Written by Elizabeth Ecker

 

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As Housing Market Thaws, Seniors Once Again Willing to Move

bigstock-Sold-Home-For-Sale-Sign-Home-1893969A surge in consumer confidence, rising home prices and sales, and faster selling times for properties on the market are all positive signs for the senior housing industry. It’s enough to make some market analysts believe seniors have finally reached the seventh stage of recovering from housing market-related grief: acceptance and hope.

“About two years ago the market was in shock, going through the stages of grief, aligned with the housing market,” says Michael Starke, owner and managing director of senior market feasibility firm PMD Advisory Services, LLC. “They were in [the] denial, bargaining [stages]. But now the majority have moved into a period of acceptance. There is a lot more willingness on the part of the senior to start looking at moving. They’re more confident about the ability to sell their home.”

Part of that includes adjusted expectations as to what their homes are worth, he adds, and based on more than 100 focus groups PMD Advisory has conducted on about 1,500 seniors around the country, many now feel they can sell and get a fair deal—even if it’s less than what they might have gotten four to five years ago.

“It’s a trend I’m excited about,” Starke said. “Seniors seem to be in a place of acceptance about their economic situation and their home values. The activity level is starting to move, and that’s a really good sign.”

Existing home sales rose in April to the highest level since November 2009, according to the National Association of Realtors, up 9.7% from the previous year.

Properties are also selling more quickly, on the market for a median 46 days in April compared to 62 days just one month prior—the fewest days since the NAR started monitoring it in May 2011.

The slow but steady recovery of the housing market is good news for the senior living industry, and Chris McGraw, senior research analyst at the National Investment Center (NIC) for the Seniors Housing & Care Industry, noted that existing home sales are a better indicator for the independent living market than are home prices.

“At one point in time, the relationship [between housing prices and occupancy] was very strong during 2006 and 2009 when pretty much all economic data was plummeting,” said McGraw. ”Since 2009, the relationship hasn’t been quite as strong, because when you’re looking at occupancy, there are a whole lot of factors going into play.”

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Chart credit: NIC—NIC MAP & Case-Shiller Home Price Indices 

Since bottoming out at 86.8% in the third quarter of 2009, independent living reached 89.3% as of the end of the first quarter of 2013, according to NIC data. Meanwhile, home prices increased 12.1% in April 2013 compared to the previous year—the most in more than seven years, according to CoreLogic.

However, independent living census is still below pre-recession peaks of 92.5%, reached in the fourth quarter of 2005 and again in the first quarter of 2007, and while there appears to be a correlation between occupancy and home prices on the recovery side, there’s more to the picture.

“Housing does play a piece, but it’s not the sole driver,” McGraw says of independent living occupancy.

The supply of new units is one piece of the puzzle, according to him, along with the performance of the stock market and its impact on seniors’ retirement portfolios, employment rates, consumer confidence, and the economy in general.

New construction for senior living stalled almost completely in the wake of the recession, but with a robust U.S. stock market spurred by low interest rates, capital is less constrained, say developers.

Another positive: consumer confidence reached a six-year high in May of 84.5 on the Thomson-Reuters/University of Michigan consumer sentiment index.

“The surge in consumer confidence is exactly the type of economic jumpstart the Federal Reserve intended to result from its aggressive policies,” said Richard Curtin, chief economist at Surveys of Consumers at Thomson-Reuters/University of Michigan, in a statement.

But there are caveats, including unemployment rates hovering at 7.6% through May 2013 and a recent report from the St. Louis Federal Reserve finding that household wealth still lags behind pre-recession levels when factoring in inflation.

“It will take actual and repeated income increases,” Curtain said, “rather than simply a renewed optimistic outlook for consumers to permanently revise their income expectations upward.”

 

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Phyllis Shelton Challenges ABC Special on Alzheimer’s

From LTC Expert Blog, Valerie Van Booven
10/21/2010
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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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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Need Home Modifications To Age In Place? A Reverse Mortgage May Help

Most seniors want to stay in their homes and remain independent yet often believe they can’t for a number of reasons.  Making some home modifications could make their wish of remaining in their home a reality by providing a safer more comfortable environment.

More than one third of those age 65 and older suffer injuries from a fall each year according to research from the National Center for Injury Control and Prevention.  AARP research suggests the leading cause of injury and deaths among seniors is falls.  Modifying one’s home can help to eliminate common hazards and help to improve the quality of living in one’s home.  Improving the safety of one’s home can help one have more comfort, convenience, and  remain independent and active in their community.  Some people have mobility limitations from causes other than falls and still want to stay in their home.  This too can be accomplished with some home modifications.Home modifications can help seniors remain in home

Bathing, toileting, cooking, and climbing stairs can be made easier to perform by adapting one’s home.  Modifying one’s home can be as simple as installing grab bars in the bathrooms, removing throw rugs, moving electrical cords from hazardous locations, touch buttons for turning lights on and off to installing entrances to accommodate wheel chairs and lifts to access another level.

By assessing and modifying one’s home, one can live more safely, comfortably and remain independent.  But how can one afford this?  A reverse mortgage may be the solution beyond what Medicare or insurance will pay for.

A reverse mortgage is a special loan to allow seniors to remain in their home with security, independence, dignity, and control by converting the equity into cash.  Similar to a conventional loan where a lien is placed on the home yet the borrower retains ownership.  The reverse mortgage is different from a conventional loan with no income or credit scores required and no monthly mortgage payment requirements.

The reverse mortgage loan amount is based on the age of the borrower, their home value and an Expected Interest Rate.  Due and payable when the home is no longer the primary residence, usually when they move, die or sell, a reverse mortgage can allow one to remain in their home and use the equity now.  As a non-recourse loan there is no personal liability to the borrower or their estate as long as they are not retaining ownership.  If the home is sold for more than the loan balance then the borrower(s) or their heirs keep the difference.Reverse Mortgage Helped Bob Modify His Home

Bob, a Minnesota senior who had lost his wife wanted to stay in his home.  He did the reverse mortgage and with a portion of his proceeds he modified his home to be prepared for the future such as having the doorways wider to accommodate a wheel chair and grab bars installed.  He’s thrilled that he was able to have his home modified and will be able to remain there for years to come.

 
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Posted by on September 14, 2010 in Uncategorized

 

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