Planning and Paying for Long-Term Care
We’ve done the research and want to share what we found. To learn more about your funding options for home care services, join Griswold Home Care, Financial Health Services, Elder Resource Benefit Consulting, and Life Care Funding to find out how.
This webinar workshop will feature:
Secret #1: Converting Life Insurance to a Life Care Benefit Plan. There is $500 billion in life insurance death benefit in the hands of senior citizens 65 years or older in the US today, yet 88% of all policies will either lapse or be surrendered for little of no value. Find out if converting this benefit into a Life Care plan benefit
Secret #2: Accessing Veterans Benefits. Veterans and surviving spouses can qualify for over $2,000 per month in long-term care services. Find out how.
Secret #3: Utilizing Long-Term Care Insurance or other Third Party Payors. Navigate your policy and uncover other local community payment relief options.
* This webinar workshop was hosted September 19th, 2013 and the recording is now available for viewing.
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Derek Jones: Good afternoon, welcome to today’s webinar, titled ‘Planning and Paying for Long Term Care.’ My name is Derek Jones, and we’re here in an office space here in Philadelphia, PA, bringing this webinar to you with an exciting topic, with an exciting group of expert panelists to bring a lot of great information to you today.
This is one of our largest national webinars, with over 300 registrants, so thanks to all of you who have registered and are attending today hoping to get great information on this topic. Today’s topic, ‘Planning and Paying for Long Term Care,’ is such an important topic. We have a rock star line-up of experts to help family caregivers and healthcare professionals understand the topic a little bit better.
First, a few housekeeping items. All lines are muted. The webinar workshop is recorded and will be transcribed and made available within 48 hours through email to anyone who’s registered and attended the webinar. The webinar will then also be posted on Griswold Home Care’s blog.
Q&A will be held at the end of the webinar, but during the webinar please feel free to use the panel on your right toolbar, the chat panel that you can type or ask any questions during the webinar. Our panelists have the ability to see those questions, and we will do our best to include those as the webinar goes on and answer those at the end of the webinar.
Our expert panel of speakers have decades of experience on the topic today, and are credentialed and very experienced in their field and their discipline. While each expert has a lot of resources to share today, today’s webinar is not providing tax, legal, or insurance advice.
Anyone on the webinar should take the topics today as great information, but you should always seek tax, legal, and insurance advice from local, licensed professionals.
Let’s get to the goals for today. The first goal is to understand what is long term care, and what are the issues surrounding cost of long term care. It’s a very broad topic. We could have an entire week’s training session on this topic for professionals, or even family caregivers. What we’ve done is we’ve found some of the best experts in the field to help boil down the basics of long term care, but also to bring to you resources to help pay and fund for long term care.
Then we’ll hear from each of our expert panelists from 10 to 12 minutes on the topics of life insurance, veterans’ benefits, long term care insurance, and other third party payer resources that can absolutely help those who are on the webinar today help fund long term care.
Our expert panelists today, we have three expert panelists. Our first panelist is Don Poole co-founder and chief marketing officer of Life Care Funding. We’ll take a second just to let Don introduce himself. Welcome to the webinar, Don.
Don Poole: Oh, thank you very much, Derek. Delighted to be here.
Derek: Fantastic, thanks, Don. I think Don you’re coming to us from New York today?
Don: I’m actually in Scottsdale, Arizona today, but I’m based in New York. I’m out in the desert for the day.
Derek: Fantastic. Thanks for being on, Don. Our next expert panel is Patty Servaes, founder of Elder Resource Benefits Consulting. Patty, welcome to the webinar.
Patty: Thanks, Derek. Glad to be here.
Derek: Our third panelist is here in the room with us here in Philadelphia, is Matt Murphy [sounds like 3:47], president of Financial Health Services. Welcome to the webinar, Matt.
Matt: Thanks, Derek. Thanks for having me on the call.
Derek: All right. Before we introduce the expert panelists and have them dive into their topics, let’s frame the conversation of long term care. What is long term care? A lot of folks on the call have experience with this today, but let’s boil this down to its basics.
Long term care is a range of services that support with basics called ‘activities of daily living’. These are the things that you see on the screen. Simple things like bathing, dressing, using the toilet, caring for incontinence, eating. The things that keep you independent at home.
When we refer to long term care and needing assistance with long term care, this typically means that an individual in their own home environment needs assistance from another individual to carry out these basic activities of daily living. For those of you who are on the call and may see this webinar after the call, you might be asking, ‘Well, I may never need help with that. I’m always going to be able to take care of these things by myself.’
We all hope that’s the case, but the reality is, and the facts show, that 70% of everybody over the age of 65 will need help with long term care services at some point in their lifetime.
Knowing that 70% of people will need assistance with long term care, how much does it cost? A lot of interesting stats are out there today that show, AARP put out a stat a couple summers ago that said the average adult child, female, will normally spend 18 years of her life taking care of her kids, and then 19 years of her life taking care of, directly or indirectly, her own parents.
If you think you’re an empty nester once your kids are out and have graduated, a few years later you’re going to need to help with your parents. There’s a lot of cost associated directly and indirectly with that cost of care.
The cost to you as an individual will vary based on a lot of factors, but Genworth has created a really nice survey that they do every year. It’s a survey that is in its tenth year. The link we’ll provide to all the webinar registrants actually allows you as the audience to find out how much long term care costs in your local market.
We can see here, we’re based out of Pennsylvania today. We clicked on the link. We’re based in Philadelphia. So we can select the Philadelphia market, and we can see here that ranging from home care to adult day care, assisted living and nursing home, the average costs range from about $20,000 a year all the way up to $116,000 a year.
Obviously these are big ticket items. A lot of stats out there also are starting to show and really raise awareness that the cost of long term care is easily one of the highest ticket items that an individual will ever have in their life. It’s oftentimes more than your mortgage, more than the cars you’ve purchased in your lifetime, more than your kids’ college have cost in the past.
This Genworth cost of care survey is a great resource, it’s available on tablet, mobile, or any devices. It’s available that you can click as well. We apologize, we’re going to need to bring up the presentation here real quick. We apologize about that.
Just talking more about the Genworth cost of care survey, it is available each year. Again, it’s in its tenth year, and a lot of the research and data points that we’ve had here today is based on that information.
Okay, we’re sorry, we’re having a little bit of technical difficulty with the Powerpoint. We’re going to bring that right back up. Give us just a moment and we will pull the presentation back up.
Okay, here we go, the presentation is back up. Thank you everybody. That was a demo of the tool. Again, that’s a great tool for you as an individual or a healthcare professional,
Knowing that most folks will need long term care, and that the cost of care is high, what are the other impacts on long term care?
The Genworth cost of care survey has produced some other really interesting and impactful stats. When will you need long term care? That’s one of the questions that they asked about 900 individuals. The most predominant reason you’ll start to need care is if you start to have a chronic illness. That you start becoming frail based on age. That you have cognitive impairment, maybe early dementia or Alzheimer’s.
Also you might be coming out of a rehab. Maybe you’ve fallen and broken a hip or a bone. Typically long term care can transpire from that as well.
A couple of interesting stats I think that are out there that start to highlight the magnitude of the impact. 88% of care recipients, so those who are receiving care, said their household income was reduced by over 30% due to their long term care event.
63% of the respondents reduced their savings by over 60% as soon as that long term care event started to happen. Almost 50% of care recipients, amazing, this stat, have never considered the possibility of needing long term care.
We know that is not a reality, because over 70% of people will eventually need care. The impact of long term care extends even beyond the care recipient. Predominantly, the primary care giver will have a big impact as well.
Just a lot of impact on their individual financial situation, so on average, the primary caregiver actually spends over $8,000 of their own dollars on care for the care recipient. On average, over 40% of caregivers have lived in their parents’ home or in their loved ones’ home for over three years.
Another fact that shows how the financial situation is sensitive. Over 60% of caregivers have lost income, and on average, over 20% of their household income once they have to leave and start taking care of their parent or loved one’s care.
If we boiled it down to what it actually means to clients and caregivers who are out there, these are some quotes that came out of the Genworth cost of care survey, where care recipients were saying things like, ‘My wife had to be available 24 hours, seven days a week. She also became my chauffeur, and needed to help me shower and dress. To help me move at all really, it impacted her freedom and lifestyle.’
We know equally impacted is that primary caregiver. They have quotes such as ‘Anger at my sister and brother for not helping more with my mom.’
‘Stress with my husband over how much of our personal time taking care of mom is taking up of our own lives.’
We know the impact on the family and the caregiver is significant. The Mayo Clinic also has published some great information on the topic of long term care. That it’s expensive, it’s typically an out of pocket expense. There’s certainly state and federal programs that can assist with funding, but almost always a long term care event will involve some type of out of pocket expense.
Of course why we’re here today, the more we know about our options, the better choices we can make. To learn more about how we can make better choices, we’d like to introduce our first expert panelist, Don Poole with Life Care Funding.
Don: Thank you very much, Derek. I really appreciate it. Life Care Funding, we help seniors use a life insurance policy that they don’t need or they can’t afford, or if they happen to be spending down a Medicaid they’re told they have to get rid of.
We help that senior use their life insurance policy to pay for their care by converting the policy death benefit into a long term care benefit plan, or a life care benefit plan, which then is paid directly to the care provider of their choice through an FDIC insured, irrevocable benefit account.
It’s a way to use a life insurance asset – this is not long term care insurance, this is an in force life insurance policy that again, a senior may not need or can’t afford. Use that asset to pay for their care directly as opposed to lapsing it or surrendering the policy back to the issuing life insurance company.
The services we pay for, private duty, in home care, home healthcare, medical care, assisted living, independent living, skilled nursing and related services such as retrofitting a home with railings and ramps so that seniors can stay safely and comfortably in their home.
On the next slide. When we’re talking about life insurance in this country, we are talking about an enormous amount of money. There are 150 million life insurance policies in force in the United States, of which senior citizens over the age of 65 control half a trillion dollars worth of death benefits. Right now in the hands of senior citizens, 65 years and older, there is half a trillion dollars worth of life insurance.
Unfortunately 88% of all policies issued will lapse or be surrendered for little or no value. Most of that $500 billion unfortunately will go back to the life insurance companies as profits, because seniors at the end of their life, when they have no choices, will either lapse or abandon that policy.
Now in 2007, the government accounting office did a study that estimated that 38% of people spending down to Medicaid owned a life insurance asset that they needed to get rid of in order to qualify for Medicaid. Medicaid does not consider life insurance an asset you can keep, and they make you rid yourself of that asset in order to qualify.
There’s a lot of folks out there who could potentially use our program to pay for their senior care.
Now, the other thing people don’t really understand about life insurance is that life insurance is a legally protected piece of personal property. That was established by the Supreme Court in 1911, a case called Grigsby v. Russell, and Oliver Wendell Holmes wrote the majority opinion in that case.
He said, a life insurance policy is personal property, just like a home or stocks. It is a financial asset that the senior owns, not the life insurance company, and they have the legal right to use that policy to pay for their senior care.
On the next slide. Now, when we’re talking about life insurance, we’re talking about insurable interest. The reason people buy life insurance is because they’re trying to protect something in their life against their premature death. Insurable interest is very important when people are considering how much insurance to get.
I like to use myself as an example, because I have an insurable interest. My kids. Because I am the only breadwinner in my family, in order for me to go to sleep at night, I’ve got to know that if I don’t wake up for some reason, those kids will be taken care of. That’s why I bought my life insurance policy, and that’s why I’ll keep it for the foreseeable future.
Now for the sake of argument, let’s say I live to the age of 85 years old. God willing, I live to the ripe old age of 85. Well, when I’m 85 years old, I’ve got one thing to say. My kids better have jobs by then. Hopefully they have jobs, hopefully they have savings accounts, homes, careers, they may even have life insurance to protect their own kids.
At that point, my insurable interest will have changed. The reason I bought that policy will no longer be there. My kids are grown up and they’re okay.
If I want to use my policy to pay for my senior care, that’s something I should consider, because the last thing I want to do is be a financial burden on my children when I get older. So understanding why you want that policy and if you still need it is very important. If you don’t need it, using it to pay for your senior care should be considered
Okay, if we go to the next slide, Kelly?
Now the problem is when seniors get to the end of their life, they have very few options if they can no longer afford or no longer need their life insurance policy. The first choice is they can continue paying the premiums to keep the policy in force, so that their beneficiaries collect a tax free, probate free death benefit. That is probably their best choice. That is a great thing for people to have, and if that’s why they bought the policy, that’s what they should do. We tell everybody that.
The people we work with, that’s not really an option. They are being overwhelmed by their healthcare costs, and are going to either surrender their policy back to the issuing life insurance company for well below the potential present day value, or simply stop paying the premiums and literally throw the policy away or abandon it for no value.
Millions of seniors abandon their policy each year for absolutely no value. $60 billion a year in death benefits is abandoned in this country every year. At Life Care Funding, we allow a senior to convert a life insurance policy into a life care benefit plan which is paid directly to the care provider of their choice. Some of the key components of our program, we do preserve the death benefit over the course of the spend down period.
The balance of the benefit is paid to the family if the senior should die before the full payout period. The funds are paid to the care provider through an FDIC insured, irrevocable benefit account for their fiduciary protection.
This program keeps people off of Medicaid, because it is a qualified Medicaid spend down of an unprotected asset. Any type of life insurance, any size policy, is eligible. Term life, group life, universal life, they’re all eligible for conversion. There’s no cost or obligation to apply and to see how much of a benefit you might be able to receive. The program and the process is quick, very straightforward, and takes about 30 to 45 days.
Now, I want to give you just a brief [inaudible 18:24] action example. This involves a 70 year old male who had a $250,000 term policy. His daughter found out about our program at an assisted living facility that she was looking at. She was getting ready to lapse that policy because she could no longer afford the premiums.
If she had lapsed that policy, even after paying premiums for almost 15 years, she would’ve received nothing in return. Now our term policy does not have any cash in it, but we were still able to convert this policy to a $150,000 life care benefit plan for 60% of the face value of the policy.
Now when this gentleman passed away, there was still $60,000 remaining in his account because his daughter had only used $90,000 to pay for his care. We sent that $60,000 to his daughter as a death benefit, and so it worked out well. It offered a legacy for his daughter, as was the original intent of the policy, and it paid for a great deal of his care.
The second example involves a 73 year old female who had a $100,000 universal life policy. That policy did have cash in it, but when her daughter contacted us after seeing us online, she said, ‘You know, I’ve never paid anything into this policy and now I’m getting lapse notices.’
Well, the life insurance company will deduct the premium payments from your cash account until that account is depleted, and then send you lapse notices. That’s exactly what happened now. This woman was going to lapse her policy.
Instead, we were able to convert it to a $35,000 life care benefit plan, or 35% of the death benefit.
What’s important is awareness. Because seniors and their families need to know that if they own a life insurance policy, they can use it to pay for their private duty in home care or long term care services. It’s critical. 95% of the people out there have no idea that this is an option, and creating awareness about this program is critical.
It is just an option. We at Life Care Funding group never try to convince anybody to do this. We’re not trying to sell anybody anything. We’re trying to present it as an option so a senior can make an informed decision about an asset that they own, and that they’ve already paid for over years and years of premium payments.
This is an option people should consider, because they own their life insurance policy, and they’ve already paid for it. It’s really about education and awareness, and providing seniors with options so they can make the best decision that is right for them in their particular situation. Awareness is key.
Medicaid departments across the country are under extreme pressure from the senior tsunami that’s hitting this country. Many states make seniors rid themselves of their life insurance policies in order to qualify for Medicaid. Well, since our program keeps people off of Medicaid using a private asset that the senior owns and is most likely to abandon or surrender back to the insurance company, States have gotten behind bills that inform seniors that they have the option to use their life insurance policies to fund their care.
Right now in California, New York, Florida, New Jersey, Kentucky, Louisiana and Maine, there are bills pending that would mandate that the Medicaid department inform seniors who are applying for Medicaid and have a life insurance policy that they have alternatives to lapsing or surrendering their policies.
Right now in every State in the Union, you can do our program to pay for your care. This is all about the States making people aware of the option. Again, all about education and awareness. In Texas, the bill was signed into law on June 14th.
Who benefits from our program and how? First of all, you the consumer benefit, because you use an asset that you own and that you’ve paid for over many years of premium payments to pay for your senior care by converting your life insurance into a life care benefit plan to help you stay safely and comfortably in your home while preserving a portion of the death benefit for your family.
Who else wins? Well, senior care providers across the country such as private duty home care agencies, assisted living companies and skilled nursing companies, they win, because they get private paid dollars from the senior over a guaranteed time frame without disruption.
Who else wins? Well, taxpayers win, because our program keeps people private paying and off of Medicaid because it is a qualified spend down of an unqualified asset in the eyes of Medicaid. So three primary winners, and quite frankly the life insurance companies win too because they make most of their monies off of policies in the first six years.
It’s really all about education. Educating seniors and their families about how they can convert their life insurance death benefit into a living benefit to remain safely and comfortably in their home. It’s all about providing people options and giving them the information they need to make an informed decision. Thank you very much, guys.
Derek: Thanks, Don. Great information. Your company’s lifecarefunding.com and the phone number’s on the screen. Great information, I learned a few things there as well.
Our next featured speaker is Patty Servaes, founder of Elder Resource Benefits Consulting, here to talk to us about how seniors can tap into the VA aid and attendance pension benefit. Patty, thanks for being here.
Patty: Thanks, Derek. As Derek said, I’m the founder of Elder Resource Benefits Consulting. That’s a company that’s dedicated to bringing awareness to seniors about veterans’ benefits. I’m also a VA accredited agent.
The language at the VA’s a little tricky, so I just want to be clear from the start. That does not mean that I work for the VA or that Elder Resource Benefits Consulting is a veterans’ services organization. We are not. Very similar to being an accountant who doesn’t work with the IRS.
The VA established the aid and attendance pension to assist wartime veterans and their surviving spouses who require the aid and attendee of another person in order to help them stay off Medicaid longer than the person next to them who didn’t serve during a period of war.
There are over nine million veterans today in the United States over the age of 65, and that does not include their surviving spouses. This benefit is tax free, and was established in 1953. Next slide.
This benefit’s quite large. A surviving spouse can get up to $1,113 a month. A veteran can receive up to $1,732 a month. A veteran with a spouse can receive up to $2,054 a month.
When I first started doing this in 2005, people said there was nothing for a veteran who was not ill himself, but his spouse needed care. That’s when I coined the phrase ‘Well veteran with ill spouse.’ You can’t find that language on the VA website. It’s really just a basic pension, meaning the veteran has no care needs themselves. But still, in that situation, they can get up to $1,360 a month. Not a small sum of money. Next slide.
As you can imagine, with a benefit that the government would give you of such a large sum a month, there’s going to be a lot of criteria. That’s my plan, to go through the criteria with you today, so that when you leave this webinar you understand what the person you’re trying to help, needs in order to get this benefit.
The first criteria to even get out of the starting gate is the military service criteria. You have to have served at least one day during a period of war, at least 90 days in total, and have been other than dishonorably discharged.
What I mean by that is you can be medically discharged, and in some cases had a bad conduct discharge. For example somebody, maybe a female in the Navy in World War II who had a bad conduct discharge because she became pregnant. That would not be able to keep her away from getting benefits today. The idea of bad conduct has changed.
The other thing I really want to point out on this slide, because several times when I’ve given my speech, people in the audience have found out that they’re World War II veterans when they thought they were just there to help their older brother.
World War II, for the benefit, ends December 31st, 1946. Someone alive at that time probably thinks that World War II ended on December 31st, 1945, because that’s when we declared peace. But the year of peacekeeping counts. Same with Korea. The point for this benefit is longer than the dates that the war actually ended, which just highlights how important it is to work with someone who truly understands the intricacies of the benefits and not just your next door neighbor who may be is a historian.
If you’re a wartime veteran that’s great, but what does it mean to be the surviving spouse of a veteran? A surviving spouse of a veteran is someone who was married to the veteran at the time of his death, and except for a small window, is someone who has not remarried.
What happened is on November 1st, 1990, they changed the rules. Someone who was married to a veteran and that person died, that’s the number one, can’t get out of the starting gate unless you were married to a wartime veteran at the time of his death, and you remarried someone else. That next person, not a veteran, passed away prior to November 1st, 1990, you can go back to the first veteran’s service.
If he passed away on November 2nd, 1990, you cannot. You can only use your last husband’s service. Not that that’s something we expect you guys to remember. We really highlight it to say, ‘Hey, you know what? Lots of intricacies with this program. Make sure you’re working with an expert.’
Then if you’ve passed those criteria, you move onto what’s called the medical requirement. The medical requirement is, do you need the aid and assistance of another person? It’s called the aid and attendance benefit. That’s really a medical diagnosis within the VA system. Kind of like do you have diabetes, yes or no? It’s a medical diagnosis. Do you need the aid and assistance of another person?
It’s amazing how many times I have to tell people that a walker is not a person, and that the lifeline device is not a person. The VA’s really looking for, do you need a standby assist with a shower? Are you eating inappropriate things and need redirection and cuing for appropriate behavior? Do you need some assistance with dressing? Do you need medication administration?
One thing it’s important to realize is if you’re in the medical profession, and you think you really know what activities of daily living are. The VA is a little more lax in that they’re willing to listen to the story about why you need the aid and attendance of another person, and the fact that if you’re not receiving the care today from Griswold, who’s there making sure that you’re getting your medicines appropriately, that you might put them into a candy jar and eat them. The VA is willing to listen to that sort of tale.
If you pass this service requirement, you pass the medical requirement, then you have to pass the financial test. It is a means-based program, which means there’s an income component and an asset component.
I’m going to talk about the income component first. When I say, ‘So it looks like you’ve passed with the indication of getting full benefits’, don’t forget we still have to go through that pesky asset test.
If I were to ask all of you what’s income, for the most part you would rattle off Social Security, pensions, distributions from IRAs, dividends, interest, oil well royalties, rental property from my second home. That’s true, those are all income. Don’t forget those tax free bonds.
We can all agree, that’s income. Every now and then somebody’ll say my checking account. No, not income, that’s an asset. But, if you think about it, we can all come up with what’s income. However, next slide, that is not income for VA purposes.
This is the most important thing you’re going to take from my section of today’s presentation, and that is ‘income’ for VA purposes has its own definition. It’s everything that we just went through as income, minus regularly occurring, unreimbursed medical expenses as long as you meet those other criteria.
Why did they call it regularly occurring, unreimbursed medical expenses? Frankly I think it’s because they couldn’t come up with anything that had more syllables. Let’s go through an example of that which I have on the next slide.
In our example, we have a senior who has $3,000 a month in income, $4,000 a month in home care costs, and that means that for VA purposes, they have negative $1,000. That would be an indication that you passed the income test, looking at a full benefit.
Now the reason I say it’s the most important thing that you’ll learn in this meeting is because I’ve given this speech before, and the next day had a son call me and say, ‘Hey. I was at your speech yesterday’ – oh, go back a slide – ‘I was at your speech yesterday and I called the VA today, and they said no way is my dad ever going to qualify, he makes too much money.’
I said, ‘Well what did you say to the VA?’
‘Just what you said. He has $3,000 a month income and $36,000 a year.’ I said, ‘When did you tell him that he pays $4,000 a month for home care costs?’
‘Oh, I didn’t,’ he said and he hung up. He had to go call the VA, I guess.
That’s why it’s the most important thing. If someone from the VA says, ‘What’s your income?’ it’s up to you to remember, you have to minus out your medical expenses, and your home care cost is a medical expense.
Now what if you have a positive number? Maybe these numbers are flipped. You have $3,000 a month in income and $2,000 is your home care cost, and you’re left with a positive $1,000? The VA will compare that to the maximum benefit that you could get and approximate that difference.
Our surviving spouse, who could get up to $1,113, if she’s left with $1,000, the VA’s going to give her $113 a month approximately, leaving that other $1,000 on the table if you will. At the end of the year, she’ll have an opportunity to submit non-regularly occurring medical expenses against that. For example, eyeglasses, hearing aids, dental work. She could submit that all to the VA, and they would reimburse her until the $12,000 she’d left on the table was gone. Next slide.
This is all about aging in place, obviously. If our applicant had $25,000 in assets and $1,000 in additional monthly expenses over what we had gone through in our example, they would be out of assets in approximately one year. But if they were a surviving spouse getting that additional $1,113, their money now would last 2.35 years.
That changes to a little over three years for a well vet with an ill spouse, 7.8 years for the single veteran, and look how happy Frank and Mary are here in this picture. Because a married veteran is in a positive cash flow situation in our example. That’s quite a difference from being out of money in one year. Instead, they’re positive. Theoretically, their money could last forever.
The asset limit is determined by each individual situation. What counts as an asset is cash, stocks, bonds, security. Your home and car do not count against you, which makes it a great benefit for living at home.
The largest amount of assets that we’ve had somebody have in their own name was $248,000, but that’s a rarity. Most people that we work with, the number that we see coming up a lot is between $120,000 and $150,000 in assets, although some can only have much less. Pretty much if you have $80,000 or less, we’re going to be able to get you some type of benefit. Though, if you have more we might be able to get it for you as well.
The important thing to remember is this is not a yes or no award. It’s if and when, and if you’re too healthy or too wealthy to get this benefit today, don’t be sad, because nobody wants to be sicker and poorer. The important thing is knowing when this is the appropriate benefit for you. Next slide.
A lot of myths out there about the VA benefits. Number one is people will try to tell you that there’s an $80,000 asset limit. That’s not true. That’s the point at which the VA needs to do further development. Your particular situation may say that you can’t have more than $80,000, or your situation may say ‘Hey, you can have $180,000’. It’s the knowledge of knowing when it’s appropriate for you that’s so important.
Number two, a lot of people think that if you’re in a nursing home, benefit is limited to $90 a month. A married veteran whose spouse is not in the nursing home, the veteran’s in the nursing home on Medicaid, is still eligible for the full $2,054 a month.
Anybody who is private paying in nursing home is eligible for the full benefit. It is only when you are a single person on Medicaid that the amount is reduced to $90 a month. They’ve taken what’s really the least likely scenario and put misinformation out there so that people think that $90 a month in the nursing home is all you can get. Not true.
Then the third one I already went over with you, that a veteran living at home whose wife is receiving home care, may still qualify for $1,360 a month. Now you guys all know that too. I’m finished.
Derek: Excellent. Patty, lots of great information. It sounds like there’s a lot of intricate qualifiers, and certainly today’s content is meant to introduce people to the topic. If you have questions out there, you can see how somewhat complicated this topic can be. That’s why a company like Elder Resource Benefits Consulting is out there.
Thanks again, Patty.
Patty: You’re welcome.
Derek: We’d now like to introduce our third expert panelist, Matt Murphy, president of Financial Health Services.
Matt: Thanks, Derek. I also want to spend a minute to thank Don and Patty. FHS has a partnership with both companies, and the three of us I think have had opportunity to work together to shepherd clients through the whole process. I think you’ll find that if you’re working with one of us, there’s some natural connections to the other businesses. I think you’ll experience great teamwork if you have an opportunity to work with one of us and need either of the other two.
As a veteran myself, I have a great appreciation for what Patty and her business does and what their mission is all about.
That said, I want to start with our mission. We’re proud of our mission, we’re proud of what we do and how we help seniors. Very simply put, we help seniors pay for long term care. ‘Helps’ is a bit of an understatement, maybe a bit of an oversimplification. There’s a lot of levels to that, and that’s how I’m going to spend the next few minutes talking about, is what that help really connotates [sic].
Little bit about us. You can see we’ve been around for a long time. I have founder’s envy for Don and Patty, in that I’ve only been with FHS for two years as of today, but we’ve been around for a long time.
Our business has grown so fast that we actually have 1,000 current clients now. We’re growing faster than we can keep up with our own slides. We work with about 150 different third party payers that we will help clients to access a benefit through, and to receive some sort of payment from in this context.
Work with over 100 different offices and as Derek mentioned earlier, we’re right down the street here in Plymouth Meeting.
This slide represents our model. This is not an Ikea diagram, this is not how to put together a bookcase. This a representation about how our model works. As you can see, we sit in the middle of the four different constituents that are in the ecosystem in this provision of care. Going back to our mission, we help the client, in this case the care recipient, engineer this whole process.
As you can see there’s a lot of different moving parts, there’s a lot of arrows going between all these different constituents. The bottom line is when a client will engage with FHS to help in this process, they really don’t have to worry about anything except for their care. By outsourcing the process to us, they can really just focus on the care and about their quality of life.
I’m going to spend a minute talking about what that process is. It has several different phases if you will. The first phase is what we call pre-cert, and that’s the benefit assurance phase. The very first conversation that takes place between an office and a prospective care recipient. In that conversation, things will come out about ‘I think that Dad was in the Navy, so he might have a VA benefit available. Or I think Mom has a Genworth policy.’
Those are the triggers where FHS will be introduced in that conversation. Four or five steps to go into that pre-cert process. A lot of information that needs to flow back and forth, and again, the FHS role in that is to quarterback the flow of that information.
What we do from a service side is we’re zealous advocates for the client to whoever the third party is, that the third party benefit really is something that should be paid to cover this client’s care. The third parties, they range from everything from long term care insurance to not-for-profits to the VA to disease specific organizations. There’s a whole host of those folks.
They are, particularly the long term care insurance slice of that pie, they’re very good at hanging onto their money. What our mission is, what our role is, is to be great advocates for that client on behalf of the client to make sure that if a benefit is owed, that the client will receive it.
From why do clients use us, one reason is the hassle factor of the five or six steps that go into the pre-cert phase, and the benefit assurance phase. We’re there to take that angst away from the client and their family when they’re trying to access their benefit.
Typically that’s at a time when a client and their family have enough other stress and tension in their life that maybe is new to them. So having to deal with the long term care insurance company is not something that is attractive to them at that time.
The last step in that first phase is when an assignment of benefits is executed in favor of FHS. That’s a legal document that allows us to then pay caregivers and submit bills to the third party, and to receive funds from the third party. As soon as that assignment of benefit is in place, caregivers can go out and start to render care to the client. The caregivers will then send their time-slips into us.
Again, we understand that constituency as well, and we understand that caregivers, like most of us, really need to get paid right away. Our promise to them is that we’ll make payment out to them within 24 hours of receipt of their time-slip into our office. That’s a big portion of what our operations are every day, is making sure that caregivers are paid right and paid quickly.
This also gets into the factoring element of our business, in that we’re paying a caregiver before we’re submitting the bills to the third party. We’re fronting the money to the caregivers if you will. Which again is another great advantage to the client, in that the client doesn’t have to worry about making sure the caregiver gets paid. We take that off their hands. Both from an administrative side of that and the cash flow side of that, the client gets to hang onto their money, because we’re going to be paying the caregivers.
The next step in the process for us in this, what turns out to be a ten step process, is when we submit bills to the third party. We’ll submit whatever it is that that particular third party needs in order to render payment to us, with about 150 different payers, we have about 140 different processes that we have to go through in order to get the money back from the third party.
When we do get paid, we then will in turn make payment back to the office that coordinated the care. The premium on that process from billing to office payment is that we’re perfect and fast. Sometimes we call it fast and perfect, but that’s really the only leniency we get. We have to meet both of those criteria to keep everybody happy in that context.
The last thing we do, the very last step of this ten steps, is that we’ll, at the end of the year, submit 1099s, prepare and submit 1099s, for the money that we pay out to the caregiver. The very last advantage that a client has and a family has is the regulatory one, in that the family doesn’t have to worry about whether a 1099 needs to be submitted, or who’s going to do that, because we take care of that.
Again, the reasons that clients will use us to sit in the middle of those four different groups is our expertise. We’re very familiar, we have deep relationships with those 150 different payers, and a good track record of being able to receive 100% of payment from them.
The administrative convenience, I don’t think other than the 22 people that work for FHS, I’ve yet to meet anybody who gets excited to get on the phone and wrestle with the third party over payment. From the family’s perspective, they have a lot of other things to worry about in that time than trying to keep track of payments and paperwork with a third party.
Obviously there’s a cash flow benefit to the clients if we’re paying the caregivers and all the money’s flowing to and from third party, then the client and the care recipient’s family doesn’t have to worry about, is everybody getting paid on time. That’s what FHS does for them. As I just mentioned, the regulatory compliance with the 1099.
What I just talked about is all the third party process. I want to spend a minute here is on this slide is to talk about our private pay service. We call that Easy Pay. I’m going to talk about the left side of the page here. The right side is the third party process we just went through, and it’s on there to show the similarities between the two.
For Easy Pay though, it’s a product that in a private pay context will be the right product for a handful of situations. Those situations are oftentimes, and folks on the call know this better than I do, but oftentimes the person who is paying for care is not necessarily resident with the care recipient. Oftentimes it’s somebody who’s in another state.
From a convenience standpoint, it’s a concierge payment service that we can provide so that the person paying for care can do that, as the name implies, in as easy a fashion as possible. By easy, that means they can pay it by any way they want, from a check to credit card to ACH. And we can substantially reduce the number of checks that a family might need to write. As opposed to eight checks a month, if they want to use Easy Pay, they can boil that down to one payment that they would make every month. Again, the product and the model’s really designed to be extremely flexible.
Oftentimes another reason why Easy Pay might be the right fit, a lot of families that, they like to use the credit card for points and other benefits that they’re getting from their card. The third reason that Easy Pay might be the right fit in certain circumstances is if from the office standpoint, if they have any trepidation or concern about a family’s ability to pay regularly. If they use Easy Pay, then because we have a credit card or the ACH on file, we can take the collection, timing, and risk and inconvenience out of the process by using Easy Pay.
Derek: Matt, this Easy Pay product, if I’m here in Pennsylvania, my grandparents are down in North Carolina, I know a caregiver’s going into the home. Walk me through the process. I can work with Financial Health Services so I don’t have to be there to cut a check to the caregiver?
Matt: Yeah, exactly. Oftentimes absent Easy Pay what would happen is Derek would then at the end of the week have to figure out how to get a check to the caregiver and a check to the office. Again, if Derek’s up here working the 80 hours a week that he works, that’s not something that he can readily do.
He will also have some perhaps a little bit of anxiety about exactly what’s being worked when he’s not there to monitor it. Via the Easy Pay product, we can take care of that payment processing for Derek and make sure that everybody gets paid, and he only has to make one payment at the frequency that’s best for him and his family.
We make sure that caregivers are paid on time and the office gets their fee on time.
Matt: Again, it’s a concierge product. It’s for the administrative convenience. The easy part is that clients and their families can pay by whatever is the form that is best for them. From the economic standpoint, the fee that FHS earns for that is 5% of the sum of the caregiver fee and the office fee.
In that fee, we will also bear the credit card charge. It is a relatively low priced service that we offer for that. I should mention, just to go back to the third party process to differentiate the pricing. The pricing is slightly different in the third party context, and it turns out to be about 10% of that sum.
That’s not exactly our rate schedule, but that’s what it historically turns out to be. That fee is generally one that is invisible to the client, meaning that it is borne out of their policy, or if it’s through a non-profit or the VA for instance, it is borne by the third party.
In the long term care insurance case, the economic detriment for using FHS is that our fee will erode a lifetime benefit, but the [inaudible 52:50] on this is that the industry was smart in the way they set it up, so that in the case of women, about half of the value of the policy will be used on average by the average woman, and only about a third of that policy will be used in the case of a male.
Typically there’s a lot of room in that lifetime benefit for the fee that FHS charges. Again, it’s for the cash flow aspect and the convenience. It’s very well worth it.
Derek: Matt, great information. In another scenario, if my grandmother needs long term care, we’re going through all of her documents, we find a long term care insurance policy. This thing was written in the 80s. It’s written by attorneys, for attorneys. The process, we can call FHS and what happens from there?
Matt: We’ll have to gather some information about the policy, some basic demographic information. We’ll have a HIPAA form executed on our behalf so we can have the conversation with the long term care insurance company.
That’s when that pre-cert process starts, that benefit assurance process starts. That’s where the team goes to work to really zealously advocate for your grandmother in this hypothetical, to make sure that the company will honor the benefit and they’ll pay it out at the rate that’s expected.
Derek: Practically from that point our family would really never have to deal with the insurance company. You guys are going to [inaudible54:30] payment, paying the office, paying the caregiver, handling all that so we can focus on the care.
Matt: Yeah, couple forms up front and then that’s the end of it.
Again, thanks to Matt, Don, and Patty. Some key takeaways to the webinar today, just starting from the top. Long term care planning affects the entire family. All the examples that Matt gave, and Patty and Don gave, these are real examples that families go through.
Having a family go through long term care is in of itself a new life event. Paying for long term care is just another layer that can be complicated. And the cost of long term care is high. We know from the policies that we’re talking about today and the resources, these are not small amounts that long term care costs, but the companies and the resources today can assist greatly with helping pay and access those benefits.
We’ve also introduced three great companies that have resources, if they make sense for your family and your situation. We have a bunch of questions that have already been typed in. We’d love to hear any questions. Any comments, any feedback?
If you’ve gone through the VA aid and attendance process before, if you’ve redeemed a long term care insurance policy, if you have a life insurance policy and have gone through that process, or if you have questions for any one of our expert panelists, please type those into the Go To Webinar panel by clicking the orange or red arrow. It should be in your upper right hand corner.
Then there is a chat or a question panel. If you type in your question or comment there, we’ll be able to address that to the audience. Please hold a moment and we will compile the questions.
Okay, great. This first question I believe is going to be for Don. Don, we have a question from Belina Butler [sounds like 56:26]. She asks ‘what policies qualify for conversion?’
Don: That’s a great question, Belina. All types of life insurance qualify. Term life, group life, universal life, whole life, any type of life insurance is eligible for conversion, because they all have a death benefit.
We’re not talking about converting or using the cash value. That’s something you could use right now. You could pay for your care using the cash value in a policy, if it has cash, immediately. What we’re talking about is monetizing the death benefit, which is the most valuable part of a policy, especially if someone is in their later years. Any type of life insurance policy is eligible for our program.
Derek: Awesome, sounds good. Thanks, Don. We have a couple more here for you in just a moment. We’ll shoot over to Patty here. We have a couple questions for Patty. The first is a question from Dave Nelson [sounds like 57:24]. What is a VA certified agent?
Patty: A VA accredited agent is somebody who has submitted a request to the VA to be considered an agent. You have to provide references, and they do a background check on you. You have to provide three written references, and they call them and discuss it with them.
After you’ve passed that, you are eligible to take the test. Then if you take the test and you pass it, you are a VA accredited agent, and you have to complete continuing education hours to maintain your accreditation.
Derek: Awesome. Patty, we’ll stay right there with you. We have a follow-up question from Dave. Dave asks, ‘In my work with the VA, it looks like the VSO I have worked with for 20 years experience, have never seen the aid and attendance benefit issue. Is it really that difficult to qualify?’
Patty: No, it isn’t. But if you think about it, the VA has over 30 different programs, and most of them are geared towards people that were injured in the service. This is a non-service connected pension, meaning you do not have to have been injured in the service.
Most of the veterans’ services officers’ training is focused on veterans who were injured in service, or veterans who retired after 20 years in service. It is the forgotten benefit if you will.
Derek: For the audience here, Patty, just to disclose our relationship with Patty, we know her firm to be one of the experts in the space. Patty, for those clients who contact you and you pre-qualify them as qualifying for that A&A program, how long does it take when your firm submits, to receiving approval? What percentage of those folks that you pre-qualify end up receiving the benefit?
Patty: Our average time to award is four months after you submit the application with the VA. The reason why it’s four months is we try to make sure that everything is perfect. Our goal is that the VA doesn’t possibly have a question that they can ask. Doesn’t mean that they sometimes don’t lose the application, or that the family member that we’re working with has no idea that their mom was married to somebody before their dad, and we end up getting a request for additional information. Even with those folks that end up taking a longer time, they’re in our four month average.
The people who get the reward that file with us, it’s virtually 100%. The reason I say virtually, we have had one person that lied about being divorced from the veteran, so they were appropriately denied by the VA for withholding that information.
The other time when people may not get the benefit, where we thought they were going to get it, is because they passed away prior to the benefit being granted, and still had enough assets to have fully paid for all of their care through [inaudible 01:00:33] through the date of their death.
Derek: Excellent. We’ll go back to Don, we have a question from Christine Steel, who asks if a life insurance client has been diagnosed with a chronic illness such as Parkinson’s or dementia, can they convert the life care funding after the diagnosis?
Don: Absolutely, absolutely. The reality of the situation is that a life insurance policy is a mortality or longevity based asset. That means that its value is directly related to the life expectancy of the insured.
What we do with life care funding is an actuarial analysis and a policy analysis that issues us a benefit amount. That benefit amount is then offered to the family, they can either take it or not, it’s completely up to them. If they decide to do it, the monies are put into an irrevocable account that pays the care provider directly on a monthly basis.
Really, you need two things to do our program. A, you need an in force life insurance policy, but you also need an immediate need for some form of long term care, whether that’s assisted living, skilled nursing, private duty home care, whatever. Again, we’ll also retrofit a home with the hospital bed and railings.
That’s the thing. Quite frankly, the more infirmed [sic] you are and the more illnesses you have, the greater the pay out is going to be. Because again, this is not long term care insurance. This is converting an in force life insurance policy death benefit into a life care benefit plan to pay for care.
Derek: Excellent, thanks, Don. Let’s see, it looks like we’ll stay right there with you, Don. We have a question from Susan Blatt [sounds like 1:02:23] who asks how is the percentage of death benefit that the client receives as a life care benefit determined?
Maybe you just answer that a little bit, Don, but she also has a follow-up question. Why is one 35% and another 60%? What is the fee that Life Care Funding takes from the policy?
Don: Absolutely, that’s a very good question. Again, as in everything in life, there’s a catch. The catch in this transaction is that you’re going to get less than the full death benefit, a discount on the full death benefit of some amount based on two criteria.
One, your life expectancy, and two, the policy itself. The amount of the discount again is depending on those two criterium. Most of the difference of what we pay out and what we receive at the time of the senior’s death is used to run the company.
Our fee is approximately 3% to 4% of face per transaction. We’re a volume game, we have to do a lot of these, but that’s generally what it is. We actually have a lot of regulatory requirements, we do a lot of legal work, we have a lot of administration costs. Most of that difference goes to running the company.
Also the money we pay out stays out for a long period of time. What happens is we actually become the owners of the life insurance policy, and are responsible for all premium payments. Essentially the sale price or the amount that we pay for the policy is put into the irrevocable benefit account to pay for care.
It is a secondary market transaction, which is governed by the viatical or life settlement laws in the state where the transaction takes place. We do our own internal actuarial analysis. Because we come from the long term care industry, and the data we use is gathered from caregivers in the long term care channels, so we price very aggressively.
Our payouts are generally higher than a traditional life settlement or viatical settlement. Again, you can only use our funds for the specific purpose of paying for your long term care.
Not necessarily an option for everybody. It may be appropriate for a family, it may not. We are all about educating them and helping them make the decision about whether to do this program or not.
Again, probably the best option is to keep that policy in force. Most of the people we work with, though, that’s not an option. Again, they’re being overwhelmed by their healthcare costs, their kids are grown up and okay, they need that money to pay for their care.
Most of the families we work with are middle class families. They’re too wealthy to go right off the Medicaid, but they’re having trouble paying for a long term or sustained illness the way they want to live.
Derek: Excellent, thanks, Don. A couple of questions here. We’ll go back to Patty. How would someone find a VA accredited agent, and how would we get started with this benefit?
Patty: Well, of course I would hope the VA accredited agent you would want to work with would be me. So you would do that by contacting Elder Resource Benefits Consulting and scheduling a call. If you wanted to hunt out a VA accredited agent on your own, you can go to VA.gov, or you can search on VA accredited agent, and the list of all VA accredited agents is maintained by the Office of the General Council of the VA, and you can do a search there.
Derek: Great, and the last question there for you, Patty, is from Susan Blatt. ‘If a client wants to use Elder Resource Benefits Consulting to access their VA benefits, what is the fee, what are we paying for, and is it one time or ongoing?’
Patty: Okay, so the way that we work, Elder Resource Benefits Consulting has a website where a lot of facilities advertise. But in general for home care, what you would do is you would call, set up an initial contact with Elder Resource Benefits Consulting.
We would go through a lot of the details with you, that first phone call is free. If you decided that you wanted to become a cash flow analysis client of Elder Resource and Surveys Consulting Group, there’s a one time fee of $800 for the cash flow analysis. Then we assist you pro bono with the VA benefit for the remainder of the applicant’s life.
So, what you’re paying for is the cash flow analysis, and then we assist all of our cash flow analysis clients at no charge through their death or through the accrued benefits filing if that’s what’s required.
Derek: Fantastic. Thanks, Patty. I know as Griswold Home Care has surveyed the land of anyone who can assist with the benefits, there are all kinds of creative areas that are very gray, of how consulting companies will help access that benefit.
There are a lot of things to be aware of. We first were referred to Patty’s group through the founder of veteranaid.org, who solely recommended Patty’s company as being ethical and reputable, and that fee model as being one of the most reasonable and practical and non-exploitive way of accessing that benefit, relative to other options in the marketplace.
Patty: Oh, thank you, Derek. I should say, we do not sell annuities, nor help to restructure assets. Which is what most people try to do.
Derek: Thanks, Patty. Great information. We have a few questions left, but we are out of time. We’ll do our best to distribute those to the panelists. We want to again thank our expert panelists today. Patty with Elder Resource Benefits Consulting, Matt Murphy with Financial Health Services, and Don Poole from Life Care Funding.
On behalf of Griswold Home Care, we want to thank our presenters and all of those who attended the call today. Griswold Home Care is a non-medical home care company. We refer caregivers who assist with activities of daily living.
We have over 160 offices throughout the U.S., and we were actually founded by Jean Griswold, who was diagnosed with multiple sclerosis. After being diagnosed and seeing the needs of non-medical care in the community in her church, she founded Griswold over 31 years ago.
We can be reached at 800-Griswold, or on griswoldhomecare.com. We’re happy to also connect you with the expert panelists that you’ve spoken with today.
Thanks again. I hope everybody has a great week, and hopefully today’s information was helpful. Have a great week.