Medicare: The Low-Down on a “Catchall” Solution

 

Medicare private insurance graph

People who have not yet attained “senior status” may mistakenly believe that once they turn 62, concerns about future long-term care expenses will vanish: “Medicare will cover it”! While Medicare is certainly a blessing for older adults, it’s not a cure-all or a catchall, and seniors must become aware of how eligibility will impact their health, finances and living arrangements.

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At the top of the list of potential health and lifestyle changes is the new Affordable Care Act (ACA), signed into law by President Obama in March 2010 and due to take effect January 1, 2014. The ACA purports to:

  • Help Medicare recipients with the cost of prescription medications
  • Increase access to preventive care
  • Boost support for primary care practitioners
  • Offer seniors more Medicare advantages.

Yet even with its implementation imminent, the ACA legislation is still under fierce debate. Recent news reports reveal some insurers are limiting their networks of doctors and hospitals to those who are willing to accept less reimbursement. Doctors have been facing cuts in Medicare reimbursements as well, and some are now choosing to limit their practice to private pay and non-Medicare insured patients. Hospitals are streamlining staff in order to remain profitable, which translates to fewer doctors, nurses, and support personnel available to provide patient care.

However, regardless of what effect the ACA will have, it’s important for seniors and those who care about and for them to understand how Medicare works. Medicare will only cover long-term care under certain circumstances.

Medicare Part A (hospital insurance) will pay for:

  • Hospital care
  • Skilled nursing facility (SNF) care
  • Nursing home care (as long as the care involves skilled nursing — if someone only needs assistance with activities of daily living such as bathing, dressing, etc., in most cases Medicare will not cover it)
  • Hospice (end-of-life care, usually in the patient’s own home)
  • Home health services

Although Medicare will not cover the cost of assisted living, for example, it will cover qualified health care costs incurred while a senior resides in an assisted living facility. Medicare is therefore a temporary and/or partial resource, not a long-term subsidized housing solution.

Medicare Part B (medical insurance) covers medically necessary services and preventive care: physician services, lab and x-ray services, durable medical equipment, outpatient and other services.

Medicare Part C, the Medicare Advantage Plan, is supplemental insurance offered by private, Medicare-approved companies.

Medicare Part D covers prescription medication.

Because federal and state laws affect Medicare’s various plans, it’s essential to know what coverage you have. Medicare.gov explains the different types of coverage simply, and provides an easy way for you to check whether your service or test is covered.

What about Medicaid? This program is more of a “last resort” because it generally requires individuals to have exhausted their personal assets — although this is projected to change somewhat under the ACA. Watch for a detailed Medicaid overview in an upcoming post.

Bottom line: both housing and health care are critical factors for an aging population. The more knowledgeable seniors and their loved ones become about how to finance their future, the better equipped they will be to manage these arrangements and costs when the time arrives. This senior living financing guide can assist you on your journey.

About the Author:

Amara Rose is a personal and business coach with a broad background in health and positive aging. She writes widely about senior housing, elder health and nutrition, lifelong learning and the spiritual dimension of aging. Contact her via amara@liveyourlight.com

 

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Silver Linings: Low Income Senior Housing

 

Caution Seniors (Low Income Housing)

While “low income senior housing” may sound unappealing to some people, the reality is that affordable housing can be a boon for seniors who find themselves spending the lion’s share of their retirement income on rent. And unless you are disabled or require long-term medical care in a nursing facility, neither Medicare nor Medicaid will pay for senior housing on an ongoing basis.

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Following are several ways to reduce your senior housing expense so you’ll have more money to enjoy your later years.

Option 1: Low Income Housing Tax Credit (LIHTC). This federally funded program has been available to the public since 1997. While not specifically targeted towards seniors, the goal is to ensure there is enough low-income housing to meet the needs of the population. According to HUD the (U.S. Department of Housing and Urban Development), which created the LIHTC, an average of 105,000 units were made available each year from 1995 to 2011.

It’s up to the building owner to choose how many units to set aside for low-income residents. For instance, an owner may opt to set aside 20 percent of a building’s units for those whose income is less than half of the median household income in the area. The other option is to set aside 40 percent of the total units for those whose income is less than 60 percent of the local median household income. Dwellings that meet the reasonable, safe accommodations requirement and other qualifying rules may then apply for the tax credit.

Owners accept the rent amount specified by HUD to participate in the program and be eligible for tax credits. If a senior meets the HUD income criteria, they can research their local area for dwellings that are HUD-approved and offer the housing tax credit.

 

Option 2: Housing Choice Voucher Program. More commonly known as Section 8, this low-income option, also offered through HUD, enables low-income residents to rent “safe and reasonable” apartments or other accommodations. Under Section 8, landlords accept 30 percent of the family’s or individual’s income as a full rent payment.

In terms of income guidelines, individuals generally must have an income that doesn’t exceed 50 percent of the median income in their local area (county or metropolitan area). This allows the program to function effectively in any location. Section 8 is not contingent on age (i.e., it is not a senior-specific low-income program).

 

Option 3: Section 202. Also funded through HUD, the Section 202 Supportive Housing Program is specifically geared towards seniors: adults aged 62 plus who meet the “very low income” requirement. It’s the only U.S. affordable housing program offered exclusively for seniors. In effect for more than half a century, Section 202 currently funds over a quarter million units for the elderly.

Section 202 is similar in structure to Section 8. Participants pay 30 percent of their income for rent, with the HUD subsidy making up the balance.

A perk of Section 202: This housing option may offer combined features of both independent living and assisted living. For example, some Section 202 housing developments provide assistance with activities of daily living (ADL), along with meals and transportation; others might offer free blood pressure screenings and social events, such as “movie night.” For seniors who are noise sensitive, Section 202 housing will also be quieter than general subsidized housing, because the only children around will be visiting grandkids!

An applicant selected for the Section 202 program signs a lease and a tenant rental assistance contract, verifying their income. Since this may change over time, the contract states that a senior agrees to be re-certified annually to ensure they are still eligible to receive assistance. If their income should exceed the very low-income limit, they will no longer receive a rental subsidy — however, they can remain in Section 202 housing as long as they wish.

Obviously, both later life housing and health care are crucial issues for seniors and their loved ones. To help you make the best decisions, please review this comprehensive guide to paying for health care and senior living as you and your family plan for current and future health and housing needs.

About the Author:

Amara Rose is a personal and business coach with a broad background in health and positive aging. She writes widely about senior housing, elder health and nutrition, lifelong learning and the spiritual dimension of aging. Contact her via amara@liveyourlight.com.

 

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Seniors and Supplemental Security Income

 

Social Security (SSI)

Supplemental Security Income (SSI) is a federal income program administered through the U.S. Social Security Administration. SSI is a needs-based program created to assist people aged 65 and over, as well as those who are blind or disabled, who are living on an extremely limited income.

SSI is distinct from Social Security, which is based on the number of years worked and amount of tax paid. SSI is also different from the similar-sounding SSDI (Social Security Disability Income), which is a payroll tax-funded, federal insurance program designed to assist people who are unable to work due to a disability. SSI functions independent of your employment history. Even if you have never paid into Social Security, if your income is below a certain threshold and you’re 65 or older, you can receive SSI benefits.

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To be eligible for SSI, an individual’s total assets cannot exceed $2000 (or $3000 for a couple). Resources you are permitted to own and remain eligible include real estate, bank accounts, stocks and bonds. In addition, when making its resource determination SSI does not count the home you live in, life insurance policies with a face value of $1500 or less, your car (in most cases) or burial plots for you and members of your immediate family.

SSI benefits are paid monthly and can be used as the recipient chooses: for food, clothing, shelter and other necessities. This online benefit eligibility screening tool can help you determine whether you qualify for SSI. The tool will also let you know whether you’re eligible for Medicare, SSDI, Veterans benefits and several other federal income programs.

Seniors may choose to use their SSI benefit to help cover the costs of senior housing, either as partial rent payment for independent living or in a facility. Some personal care homes and assisted living facilities will work out payment arrangements with individuals in need of care. These arrangements typically involve accepting the person’s SSI income as full payment, while the facility provides necessary care and services.

However, not all senior living facilities offer this as an option. And while these cash benefits can be used to cover a variety of living expenses, Medicaid is often a better option for seniors with limited incomes to pay for nursing home care.

Whether or not you qualify for SSI, you may also want to explore other potential sources of senior living funding, including Long-term Care Insurance (LTCI), Veteran’s Aid and Attendance Benefits, PACE (Program of All-Inclusive Care for the Elderly) and Life Settlements. Depending on your health status and where you currently live, one or more of these programs may be a financial option for you in your later years.

Because finances and health care are critical issues for seniors and their loved ones, it’s essential to become familiar with all the potential resources available for your needs, which may change over time. To support you in making the best decisions possible, please review this comprehensive guide to paying for health care and senior living.

About the Author:

Amara Rose is a personal and business coach with a broad background in health and positive aging. She writes widely about senior housing, elder health and nutrition, lifelong learning and the spiritual dimension of aging. Contact her via amara@liveyourlight.com

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Residence-Based Scholarships for Seniors

 

 

Residence based scholarships

Many high school seniors apply for various college scholarships that cover part or all of their tuition and living expenses. However, when the same type of need occurs at the other end of the life spectrum, seniors may not know where to turn. Finding oneself aged 62 plus, living on a reduced income and having difficulty making ends meet can be very disconcerting after a lifetime of financial solvency.

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To address this essential need, some senior living facilities offer financial assistance in the form of residence-based scholarships. Like the scholarships offered to teens for college, residence-based senior scholarships may fully cover the expense of assisted living or long-term care, or they may partially offset the cost of residential housing.

Much depends on both a resident’s income level and the facility’s resources. Some residence-based scholarships are made available through a facility’s own fundraising and/or endowment efforts. Since each residence, or their management or parent company, oversees these financial scholarships directly, seniors who are interested in applying for a residence-based scholarship first need to find out whether the facility they are planning to move to, or already reside in, offers such programs. If so, they can ask about the types of scholarships available, learn whether they quality, and begin the application process.

Because finances and health care are critical issues for seniors and their loved ones, it’s never too soon to start planning for senior living. You may wish to consult an elder care attorney before you might ever need assisted living or other long-term care, in order to protect your assets and plan for needs which are likely to change over time. Elder care financial advisors and geriatric care managers are two other types of consultants who can help you plan for future senior living needs.

To support you in making optimal senior living decisions, please review this comprehensive guide to paying for health care and senior living.

About the Author:

Amara Rose is a personal and business coach with a broad background in health and positive aging. She writes widely about senior housing, elder health and nutrition, lifelong learning and the spiritual dimension of aging. Contact her via amara@liveyourlight.com

What Seniors Need to Know About Life Settlements

 

Life Insurance Cycle (Life Settlement)

Life settlements offer seniors a way to turn their life insurance policy into income for their remaining years. In a life settlement, a senior who has exhausted his assets, is 65+ and not chronically or terminally ill, sells his life insurance policy to a third party for more than its cash surrender value (the amount he would receive if he voluntarily terminated the policy prior to its maturity) but less than its net death benefit. The purchaser takes over premium payments on the policy, and collects the benefits upon the original policyholder’s death.

In theory, life settlements sound quite attractive: in 2009, the United States Senate Special Committee on Aging determined that life settlements yield an average of eight times more money than the cash surrender value offered by life insurance companies.

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However, there is a downside: like reverse mortgages, life settlements can have high transaction fees. A number of organizations will gain access to your health information. And releasing one’s assets in this way can substantially reduce your estate, meaning there will be less to leave for loved ones. Therefore, a life settlement is recommended only when the policyholder is out of income options, has a relatively limited life expectancy and is perhaps unable to continue to pay the policy premiums.

To safeguard seniors, FINRA (Financial Industry Regulatory Authority), a non-profit, non-governmental organization dedicated to investor protection, recommends people ask the following questions to determine whether a life settlement makes sense for them:

  • Is the life settlement broker or provider licensed in my state? Check with your state insurance commissioner. If you are working with a securities broker, use FINRA BrokerCheck.
  • What will happen to my policy? The individual or company that purchases your policy will become responsible for paying the premiums and will collect the death benefit when you die. They will also gain access to extensive personal information about you, including your health status.
  • What information will I have to provide? When you sell your life insurance policy, you authorize the release of medical and other personal information, which the buyer may share with other parties, including lenders or third party investors.
  • How can I protect my privacy? Before accepting any offer from a life settlement company, find out how the company protects your confidentiality.
  • How do I get the best price for my policy? If you are using a life settlement broker, ask what bids were received and what steps the broker used to make sure you are being offered the most competitive price available.
  • What are the transaction costs? The commissions paid by life settlement companies to life settlement brokers and other financial professionals involved in the transaction can be as high as 30%. Ask your broker or other financial adviser what they are being compensated for their role in the transaction and how their compensation is being calculated.
  • What are the tax consequences? The lump sum payment you receive in exchange for your life insurance policy may be taxable, depending on your circumstances. Before entering into a life settlement, check with a tax professional.
  • What if I change my mind? You do not have to accept an offer to purchase your life insurance policy, even if you shopped around for the best price. If you do accept an offer and later reconsider, some states allow you to change your mind within a set time period.
  • Is the life settlement in my interest or my investment professional’s? The person purchasing your policy gains a financial interest in your death. And almost half of all life settlement transactions result in the purchase of new life insurance.
  • Am I being pressured to make a fast decision? A legitimate investment professional will provide clear answers to your questions and will give you the time you need to make an informed decision.

Finances and health care are vital issues for seniors and their loved ones. To support you in making the best decisions for your evolving needs, please review this comprehensive guide to paying for health care and senior living.

About the Author:

Amara Rose is a personal and business coach with a broad background in health and positive aging. She writes widely about senior housing, elder health and nutrition, lifelong learning and the spiritual dimension of aging. Contact her via amara@liveyourlight.com

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