Tuesday, March 27, 2012

Long-term care premium increases soar: Elder law attorneys become the go-to professional

Long-term care insurer John Hancock has begun the process of seeking sharp premium increases nationwide for certain types of coverage.  Initial reports from shocked policyholders surfaced in two midwestern states that have approved increases that are sometimes nearly double the previous premium.  ElderLawAnswers contacted the insurer and learned that it is going state to state asking for rate hikes it says are averaging 40 percent. 
The Chicago Sun-Times profiled an Illinois couple who just received news in the mail of a 90 percent premium rate increase.  The couple, who live on a fixed income, will see their annual premium shoot up from $3,893.40 to $7,385.52 a year.  Meanwhile, the Minneapolis Star-Tribune reports that premiums are soaring by 20 to 90 percent for thousands of Minnesotans who have Hancock policies.  One man profiled will see his annual premium jump nearly 50 percent.
It appears that the largest increases are on policies where the insurer has its greatest exposure to loss – policies that include compound inflation coverage or lifetime coverage, or both.  The rate increases come on the heels of recent announcementsby several long-term care insurers that they are leaving the marketplace entirely.  John Hancock, which is a subsidiary of giant Canadian insurer Manulife, has apparently chosen the route of steeply raising premiums rather than exiting the market.    
“The long-term care industry is still young, and only now is seeing actual usage data which indicate the need for rate increases,” Hancock’s Vice President Corporate Communications, Roy Anderson, told ElderLawAnswers.  “It is mainly this new experience – not the current economy – that is driving the change in our future claims projections and the subsequent need to increase premiums so we are able to meet all of our claims obligations going forward.”
Anderson suggested that affected policyholders can keep their premiums level by trimming their benefits package, for example by reducing the future inflation rate on their daily benefit.  If they did this, he said, they would be able to keep the benefit level that has already accrued.     
Anderson also noted that “even with the increase the resulting premiums for all policyholders will be less than what customers would pay for a new policy today adjusted for benefit differences.”
In most states, long-term care rates can rise only after the rate increase has been accepted by the state department of insurance, meaning that it will be a long process for John Hancock’s increases to reach every state.  However, nearly every state grants at least some such rate requests, and in many states the increase must be approved if the insurance company can demonstrate that it will lose money otherwise.
All this is not making it any easier for officials to convince consumers to finance their own long-term care protection.  "Government will not be able to keep up as the population ages," Minnesota Commerce Commissioner Michael Rothman told the Star-Tribune, "but it's hard to convince someone to buy insurance now if they worry they might not be able to afford it in the future."

For an Investment News article speculating that long-term care insurance “may go the way of the dinosaur,” click here.
For an article on how to cope with long-term care insurance rate hikes, click here.
For more on how to reduce long-term care insurance costs, click here.
For more on long-term care insurance, click here.

Wednesday, March 14, 2012

TSA may relax some procedures for elderly travelers. Finally!

Travelers ages 75 and older may have to undergo fewer security pat-downs to endure when going traveling the nation’s airways.

According to an article published today by MSNBC, the Transportation Security Administration (TSA) announced Wednesday it will begin testing new methods that will hopefully result in fewer pat-downs for elderly passengers.

Since most people within this age group fly out or in to Denver International, Orlando International, Portland International, and Chicago’s O’Hare, the procedures will start at those locations.

What will the new procedures look like, practically speaking?  Elderly persons may no longer be required to remove shoes and “light outerwear” at certain checkpoints.  Before anyone thinks they  are getting a free pass to avoid airport security would be mistaken, however, as TSA reserves the right to pat-down or ask to remove the shoes anyone from whom an anomaly is detected via advanced imaging technology.

Image: Tim Beach / FreeDigitalPhotos.net

Tuesday, March 13, 2012

Senior Homeowners: When does a Reverse Mortgage Make Sense?

For many seniors the equity in their home is their largest single asset, yet it is unavailable to use unless they use a home equity loan. But a conventional loan really doesn't free up the equity because the money has to be paid back with interest.

reverse mortgage is a risk-free way of tapping into home equity without creating monthly payments and without requiring the money to be paid back during a person's lifetime. Instead of making payments the cash flow is reversed and the senior receives payments from the bank. Thus the title "reverse mortgage".

Many seniors are finding they can use a reverse mortgage to pay off an existing conventional mortgage, pay off debt or help pay for home repairs, remodeling or long term care needs.
False Beliefs

"The lender could take my house." The homeowner retains full ownership. The Reverse Mortgage is just like any other mortgage; you own the title and the bank holds a lien. You can pay it off anytime you like.

"I can be thrown out of my own home." Homeowners can stay in the home as long as they live, with no payment requirement.

Virtually anyone can qualify. You must be at least 62, own and live in, as a primary residence, a home [1-4 family residence, condominium, co-op, permanent mobile home, or manufactured home] in order to qualify for a reverse mortgage.

There are no income, asset or credit requirements. It is the easiest loan to qualify for.
The amount of reverse mortgage benefit for which you may qualify, will depend on your age at the time you apply for the loan, the reverse mortgage program you choose, the value of your home and current interest rates. As a general rule, the older you are and the greater your equity, the larger the reverse mortgage benefit will be (up to certain limits, in some cases).
The reverse mortgage must pay off any outstanding liens against your property before you can withdraw additional funds.

The loan is not due and payable until the borrower no longer occupies the home as a principal residence (i.e. the borrower sells, moves out permanently or passes away). At that time, the balance of borrowed funds is due and payable, all additional equity in the property belongs to the owners or their beneficiaries.

The most popular reverse mortgage plan is the HECM. (Home Equity Conversion Mortgage) Over 90% of all reverse mortgages are HECM contracts.

You must participate in an independent Credit Counseling session with a FHA-approved counselor early in the application process for a reverse mortgage. The counselor's job is to educate you about all of your mortgage options. This counseling session may charge a fee to the borrower and can be done in person or, more typically, over the telephone. After completing this counseling, you will receive a Counseling Certificate in the mail which must be included as part of the reverse mortgage application.

You can choose 3 options to receive the money from a reverse mortgage:
  1. all at once (lump sum);
  2. fixed monthly payments (for up to life);
  3. a line of credit; or a combination of a line of credit and monthly payments.
The most popular option, chosen by more than 60 percent of borrowers, is the line of credit, which allows you to draw on the loan proceeds at any time.

Keeping money in a reverse mortgage line of credit in most states will not count as an asset for Medicaid eligibility.  It is best to get an opinion from an Elder Attorney in your state.
Tom MacDonald, in his article on “ReverseMortgageconsultant.com”, makes the following statement about Medicaid, Med-Cal or SSI requirements:
No matter how you take your money in a reverse mortgage, it is considered a loan. If you are looking at a financial statement, it is a liability, not an asset. The home is the asset. Many times we refer to the monthly payments incorrectly as monthly income. Neither the IRS nor Medicaid nor any other agency count the funds from a reverse mortgage as taxable income or qualifying income. Think of taking a cash advance from a credit card. It is money you owe to the credit card company. I've not see an agency consider the money from a cash advance as income. The funds from a reverse mortgage are similar.
The Medicaid, Medi-Cal or SSI guideline you need to be most cautious of is the cash on hand guideline. Once example is the requirement you have no more than $2,000 in your bank accounts. If you are taking $1,000/mo of payments from a reverse mortgage and spending only $500/mo, it is obvious that you will exceed the $2,000 guideline within a few months. So, when taking monthly payments, take no more than you know you will be spending every month.

Image: digitalart / FreeDigitalPhotos.net

Thursday, March 8, 2012

Plan for Your Religious Needs at Death: “How to Make Sure Your Wishes aren’t Ignored"

When it comes to estate planning, most of us are aware of the common things we need to discuss with our attorney.  There are so many financial concerns, legal concerns, and even personal concerns regarding a person’s inheritance and other desires.  

However, when it comes down to honoring our deepest religious or spiritual desires, many people overlook the necessity of incorporating such wishes into their estate.  When religion plays an important role in someone’s life, it makes sense that it would also be important in the legacy they leave behind. 
Many estate planning attorneys from Fairfax don’t necessarily focus a lot of their expertise on the religious aspects of planning, which makes sense.  After all, there are so many religions that it would be impossible for one attorney to be well versed in them all.  However, if there are religious preferences you would like to see incorporated into your estate plan, a skilled attorney in Fairfax or Northern Virginia can help you legally document the wishes of your faith.
Where to Find the Information You Need

Fortunately, there is information available to help you and your estate planning attorney uphold religious preferences in your estate planning that deeply matter to you.  Many institutions have already put together informative brochures or packets to help guide you through the religious aspect of your estate planning.  They often have sample forms that you can print and take directly with you when you meet your lawyer. 
This information can also help you to become clear on what your estate planning goals are in reference to your religion.  By setting out your goals in advance, you and your attorney can then go about setting up action steps that ensure your estate plans fit in with your values and beliefs.

Some Estate Planning Areas Affected by Religion

It’s almost surprising how many aspects of estate planning are truly affected when one starts looking at them from a religious perspective.  The most obvious area, of course, has to do with funeral and burial arrangements.  Is there a specific type of ceremony or location for the service that is important in your faith?  Are there religious considerations that need to be met?  You will likely want these included in your will, as well as your Health Care Directive (living will).

A living will and health proxies can certainly be affected by religious beliefs.  For example, what is your religion’s official stance on life support, blood transfusions, or other medical acts?  If you’re unsure but want to be in accordance with the teachings of your faith, then it is up to you to learn the answers to these questions, typically before you meet with your Fairfax elder law and trusts and estates attorney.

Even the bequeathing of your estate can be directed by your religion.  Some require specific portions of an estate be left to predetermined heirs, for example.  In addition, you may either wish or be compelled to designate a portion of your estate for your particular faith community.  Your Fairfax Virginia elder law and estates lawyer can help you determine how best to do this, whether through a specific gift or by setting up a trust.

Image: Simon Howden / FreeDigitalPhotos.net