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placeholder November 4, 2013   •   VOL. 51, NO. 19   •   Oakland, CA
How to pay for senior care with limited resources

We don't often think of living a long life as a problem, especially for those we love. But what happens when Mom, Dad, a spouse or another beloved family member are in need of regular health care yet are apparently short on finances?

Actually, paying for care may be well within your loved one's means, says insurance expert Chris Orestis.

"It's a secret the life insurance industry has managed to hide for decades: Your policy can be used to pay for long-term health care such as home care, assisted-living or nursing home expenses," says Orestis, a former insurance industry lobbyist.

"Many people who need long-term care can't afford it, so they drop the policies they've been paying on for years in order to qualify for Medicaid. The life insurance companies profit from the fact that they get all those years of premiums and never have to pay out a death benefit."

Orestis, who's been lobbying state Legislatures — including Texas — to make the public aware of their legal right to use this option, says seniors can instead sell their policy for between 30 and 60 percent of its death benefit value. The money can be put into an irrevocable fund designated specifically for their care.

He offers more tips for paying for a senior's health care:

• Don't go straight to Medicaid. If your first thought is skipping right to Medicaid, the government's health-care safety net for the very poor, then you may be heading for a trap. Once you have Medicaid paying the bills, you and your loved ones have little say in how you're cared for and by whom. This policy conversion option allows you to live in a place where you're happy and comfortable and it saves taxpayers millions of dollars every year. Also, with 30 percent of the Medicaid population consuming 87 percent of Medicaid dollars spent on long-term care services, more individuals will be forced to find their own resources to pay for those needs.

• Consider what you've already paid for: www.lifecarefunding.com. The practice of converting a life insurance policy into a Life Care Benefit has been an accepted method of payment for private duty in-homecare, assisted living, skilled nursing, memory care and hospice care for years. Instead of abandoning a life policy because your loved one can no longer afford the premiums, policy owners have the option to take the present-day value of the policy while they are still alive and convert it into a Life Care Benefit — Long Term Care Benefit Plan. By converting the policy, a senior will remain in private pay longer and be able to choose the form of care that they want but will be Medicaid-eligible when the benefit is spent down.

• Think again before tapping other assets. It costs more than $80,000 a year on average to pay for a loved one's stay at a nursing home, according to the National Consumer Voice for Quality Long Term Care. And, $178 billion is spent out-of-pocket by individuals and families, accounting for 22 percent of the money spent on nursing homes, according to the Kaiser Family Foundation. This can lead down a costly path of tapping other forms of wealth, or even seeking loans. Before doing this, consider utilizing a life insurance policy first. Conversions include provisions for funerals, and whatever money is not spent on care goes automatically to policy beneficiaries.

(Chris Orestis, is CEO of Life Care Funding, which created the model for converting life insurance policies into protected Long-Term Care Benefit funds.)

 
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