Affording Home Care - ACC


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Affording Home Care - ACC

  1. 1. Staying at Home with Care Information on available resources to help pay for long-term in-home care
  2. 2. Some Quick Facts on Aging and Care <ul><li>Every eight seconds in America, a baby boomer turns fifty.  </li></ul><ul><li>Americans aged 85 and older are the fastest growing segment of the population and the heaviest users of long-term health care services. </li></ul><ul><li>From 1960-1999, the 85 and older age group increased by more than 274 percent. Longevity is expected to rise for all ages. </li></ul><ul><li>Two out of five Americans will need long-term care at some point in their lives. </li></ul>Source:
  3. 3. Who Are the Primary Caregivers? <ul><li>Family members are often the primary caregivers of long-term health care. </li></ul><ul><li>Increasingly, women—the traditional family caregivers—are working outside the home. </li></ul><ul><li>A national study found that: </li></ul><ul><ul><li>80 percent of working caregivers reported emotional strain </li></ul></ul><ul><ul><li>50 percent reported financial strain </li></ul></ul><ul><ul><li>40 percent missed work on a regular basis due to the health needs of an elderly loved one </li></ul></ul>Source:
  4. 4. Will the Government Pay for Long-Term Care? <ul><li>Medicare was not created to pay for long-term in-home or residential care. </li></ul><ul><li>Medicaid is an income-eligible service with limited hours of care in the home allowed to keep a person at home rather than having to move into a facility for care. </li></ul><ul><li>Most in-home care that is long-term is funded by personal or family resources, creative allocation/distribution of accumulated assets during the care recipients’ lifetime, or a combination of insurance and community resources </li></ul>Source:
  5. 5. Long-Term Care Insurance (LTCi)
  6. 6. Many insurance companies have brokers specializing in this type of insurance. LTC policies that allow for substantial home care benefits should be obtained, since home is where most people prefer to remain if frailty or a chronic illness occurs.
  7. 7. 1 of 5 LTCi Shopping Guidelines: <ul><li>1. Consider buying at around age 65. </li></ul><ul><ul><li>Purchasing a policy as young as age 40 may render the coverage useless 40 years hence when it may be needed. </li></ul></ul><ul><ul><li>New systems for care may emerge that will not be covered by a policy purchased today. (For example, 15 years ago, long-term care insurance did not pay for care in assisted-living facilities. ) </li></ul></ul><ul><ul><li>If a chronic, potentially incapacitating condition like diabetes is involved, it is recommended to purchase long-term care insurance between the ages of 55 and 60. Otherwise, wait until age 65. </li></ul></ul><ul><ul><li>Buying later than age 70 will likely make the policy too expensive and persons 70+ may not pass the medical tests needed to qualify. </li></ul></ul>Source: Consumer Reports
  8. 8. 2 of 5 LTCi Shopping Guidelines: <ul><li>2. Look for a strong insurer. </li></ul><ul><ul><li>Since the policy will not be used for 20 to 30 years in the future, hunt for a company that receives high financial safety marks from insurance ratings companies. </li></ul></ul><ul><ul><li>Buy only from insurers that are rated in the top two financial strength categories by at least two of the ratings services. </li></ul></ul><ul><ul><li>Check online ratings from A.M. Best, Moody’s, Standard & Poor’s, or Weiss (at , , , ). </li></ul></ul><ul><ul><li>The first three services are free. </li></ul></ul><ul><ul><li>For $45, the “Shopper’s Guide to Long-Term Care Insurance” from Weiss provides prices and safety ratings for some, but not all insurers offering policies. Weiss charges $7.95 for each company rating online and $15 by phone. </li></ul></ul>Source: Consumer Reports
  9. 9. 3 of 5 LTCi Shopping Guidelines: <ul><li>3. Buy a flexible policy. </li></ul><ul><ul><li>Look for a policy requiring that a person be unable to perform no more than two activities of daily living. One should definitely be bathing. </li></ul></ul><ul><ul><li>A full 94 percent of nursing home residents receive help with bathing according to the U.S. Department of Health and Human Services’ 1999 National Nursing Home Survey . </li></ul></ul><ul><ul><li>A good policy will cover care not only in nursing homes but also in assisted living facilities. </li></ul></ul><ul><ul><li>A home care benefit should include adult day care, hospice services, and respite care (temporary overnight care). </li></ul></ul>Source: Consumer Reports
  10. 10. 4 of 5 LTCi Shopping Guidelines: <ul><li>4. Cover future costs. </li></ul><ul><ul><li>Call several nursing homes in the area to make sure the benefit amount will cover their charges. </li></ul></ul><ul><ul><li>It is vital that the daily benefit increase along with the price of care. </li></ul></ul><ul><ul><li>The best available option pays 5 percent a year compounded, just enough to pace the anticipated 5.6 percent annual increase in nursing home charges. NOTE: Adding this benefit to a policy may quadruple the premium. </li></ul></ul>Source: Consumer Reports
  11. 11. 5 of 5 LTCi Shopping Guidelines: <ul><li>5. A four-year benefit plan should be sufficient. </li></ul><ul><ul><li>The average length of time for current residents in a nursing home is 2-1/2 years. </li></ul></ul><ul><ul><li>Nearly 90 percent of all people over age 65 who enter a nursing home stay fewer than five years. </li></ul></ul><ul><ul><li>If nursing home care is required for a longer time period, four years will give the patient and his or her family time to prepare for the financial demands of a longer stay. </li></ul></ul><ul><ul><li>Pick a 30-day elimination period. A policy with a 90-day period might cost 15 percent less a year than one with a 30-day period. </li></ul></ul><ul><ul><li>With inflation, a nursing home that costs $181 a day now will cost $538 in 20 years, bringing the total for those 60 additional days to $32,280. </li></ul></ul>Source: Consumer Reports
  12. 12. The Federal Long-Term Care Insurance Program (FLTCIP) offers Federal and U.S. Postal Service employees, and annuitants, members and retired members of the Uniformed Services, their spouses and other qualified relatives the opportunity to buy long-term care insurance at a group rate. Under this program, insurers that are selected and approved by the government will make long-term care insurance policies available to those individuals who qualify. To learn more about this program, visit the Office of Personnel Management’s (OPM’s) Web site: . Source:
  13. 13. Home Equity Conversion Mortgage (HECM)
  14. 14. Home Equity Conversion Mortgages (HECM), or Reverse Mortgages, are becoming popular in America. The U.S. Department of Housing and Urban Development (HUD) Federal Housing Administration (FHA) created one of the first, which enables homeowners to withdraw some of the equity in their home to use as they need additional funds.  
  15. 15. What is an HECM/Reverse Mortgage? <ul><li>What is a reverse mortgage? </li></ul><ul><ul><li>A reverse mortgage is a special type of home loan that lets the owner convert a portion of the equity in the home into cash. </li></ul></ul><ul><ul><li>The equity that built up over years of home mortgage payments can be paid to the owner. </li></ul></ul><ul><ul><li>Unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence. FHA’s HECM provides these benefits. </li></ul></ul><ul><li>Many seniors use this financing option to: </li></ul><ul><ul><li>Supplement Social Security </li></ul></ul><ul><ul><li>Meet unexpected medical expenses </li></ul></ul><ul><ul><li>Make home improvements </li></ul></ul><ul><ul><li>Help pay for home care </li></ul></ul>
  16. 16. HECM/Reverse Mortgages <ul><li>Payments can be received with five options: </li></ul><ul><ul><li>Tenure – equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence. </li></ul></ul><ul><ul><li>Term – equal monthly payments for a fixed period of months selected. </li></ul></ul><ul><ul><li>Line of Credit – unscheduled payments or installments, at times and in amounts of the homeowner’s choosing until the line of credit is exhausted. </li></ul></ul><ul><ul><li>Modified Tenure – combination of line of credit with monthly payments for as long as the homeowner remains in the home. </li></ul></ul><ul><ul><li>Modified Term – combination of line of credit plus monthly payments for a fixed period of months selected by the borrower. </li></ul></ul>
  17. 17. HECM/Reverse Mortgages: Who qualifies? <ul><li>To be eligible for an FHA HECM, the FHA requires: </li></ul><ul><ul><li>Homeowners be at least 62 years of age </li></ul></ul><ul><ul><li>Homeowners must live in the home </li></ul></ul><ul><ul><li>Homeowners must own their home outright or have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan </li></ul></ul><ul><ul><li>The home must be a single family home or a 1–4 unit home with one unit occupied by the borrower </li></ul></ul><ul><ul><li>HUD-approved condominiums and manufactured homes that meet FHA requirements are also eligible </li></ul></ul><ul><ul><li>Consumer information must be received from an approved HECM counselor prior to obtaining the loan </li></ul></ul>
  18. 18. HECM/Reverse Mortgages: Who qualifies? <ul><li>Can a person apply if he/she didn’t buy the present house with FHA mortgage insurance? </li></ul><ul><ul><li>Yes. The new FHA HECM will be FHA-insured. </li></ul></ul>
  19. 19. Differences Between HECM/Reverse Mortgages and Home Equity Loans: <ul><li>A reverse mortgage is different from a home equity loan in that it pays the borrower, and is available regardless of current income. </li></ul><ul><li>The amount available to borrow depends on the borrower’s age, the current interest rate, and the appraised value of the home or FHA’s mortgage limits for the area, whichever is less. </li></ul><ul><li>Generally, the more valuable the home is, the older the borrower, the lower the interest, and the higher the amount available to borrow. </li></ul>
  20. 20. Differences Between HECM/Reverse Mortgages and Home Equity Loans: <ul><li>An online calculator like the one on the AARP Web site can be used to get an idea of what may be available to borrow. </li></ul><ul><li>With HECM, payments are not made because the loan is not due as long as the house is the principal residence. </li></ul>
  21. 21. Differences Between HECM/Reverse Mortgages and Home Equity Loans: <ul><li>Like all homeowners, borrowers are required to pay real estate taxes, insurance, and other conventional payments like utilities. </li></ul><ul><li>With an FHA HECM, borrowers cannot be foreclosed or forced to vacate the house because the mortgage payment was missed. </li></ul>
  22. 22. HECM/Reverse Mortgages <ul><li>Can the lender take the home away if the owner outlives the loan? </li></ul><ul><ul><li>No. The loan does not need to be repaid as long as one of the borrowers continues to live in the house and keeps the taxes and insurance current. The owner can never owe more than the value of the home at the time the heirs sell the home. </li></ul></ul><ul><li>Will there still be an estate to leave the heirs? </li></ul><ul><ul><li>When the home is sold, the estate will repay the cash received from the reverse mortgage, plus interest and other fees, to the lender. </li></ul></ul><ul><ul><li>The remaining equity in the home, if any, belongs to the owner or the heirs. </li></ul></ul>
  23. 23. HECM/Reverse Mortgages <ul><li>Should an estate planning service be used to find a reverse mortgage? </li></ul><ul><ul><li>FHA does NOT recommend using any service that charges a fee for referring a borrower to an FHA lender. </li></ul></ul><ul><ul><li>FHA provides this information free, and HUD-approved housing counseling agencies are available for free or at very low cost, to provide information, counseling, and a free referral to a list of FHA-approved lenders. </li></ul></ul><ul><ul><li>Search online at or call (800) 569-4287 toll-free for the name and location of a HUD-approved housing counseling agency. </li></ul></ul>
  24. 24. The Veterans Administration (VA)
  25. 25. The VA has a plan to help senior veterans afford private pay home care. Individuals must have a qualifying medical condition requiring the daily assistance of others for activities of daily living.
  26. 26. VA Private Pay Home Care <ul><li>To qualify, the veteran must: </li></ul><ul><ul><li>Have received an honorable or general discharge </li></ul></ul><ul><ul><li>Have doctor’s orders stating he or she needs the aid and assistance of others daily </li></ul></ul><ul><ul><li>Meet financial requirements </li></ul></ul><ul><ul><li>Have served 1 day during an active war and had no less than 90 days of service </li></ul></ul>
  27. 27. VA Private Pay Home Care <ul><li>The surviving spouse of a veteran may also qualify providing he or she was still married to the veteran at the time of the veteran’s death. </li></ul><ul><li>This veteran benefit process can take 4–6 months to process, but all benefits are retro-dated back to the original filing date. </li></ul>
  28. 28. VA Aid and Attendance Benefits: <ul><li>Aid and Attendance (A&A) is a benefit paid in addition to a monthly pension. This benefit may not be paid without eligibility to pension. A veteran may be eligible for A&A when: </li></ul><ul><ul><li>The veteran requires the aid of another person in order to perform personal functions required in everyday living, such as bathing, feeding, dressing, attending to the wants of nature, adjusting prosthetic devices, or protecting himself/herself from the hazards of his/her daily environment, OR … </li></ul></ul>Source: The Department of Veterans Affairs
  29. 29. VA Aid and Attendance Benefits: <ul><ul><li>The veteran is bedridden, in that his/her disability or disabilities require that he/she remain in bed apart from any prescribed course of convalescence or treatment, OR , </li></ul></ul><ul><ul><li>The veteran is a patient in a nursing home due to mental or physical incapacity, OR , </li></ul></ul><ul><ul><li>The veteran is blind, or so nearly blind as to have corrected visual acuity of 5/200 or less in both eyes, or concentric contraction of the visual field to 5 degrees or less. </li></ul></ul>Source: The Department of Veterans Affairs
  30. 30. VA Housebound Benefits: <ul><li>The benefit is paid in addition to a monthly pension. </li></ul><ul><li>The benefits may not be paid without eligibility to pension.  </li></ul><ul><li>A veteran may be eligible when: </li></ul><ul><ul><li>The veteran has a single permanent disability evaluated as 100 percent disabling AND , due to such disability, he/she is permanently and substantially confined to his/her immediate premises, OR , </li></ul></ul><ul><ul><li>The veteran has a single permanent disability evaluated as 100 percent disabling AND , another disability, or disabilities, evaluated as 60 percent or more disabling. </li></ul></ul>Source: The Department of Veterans Affairs
  31. 31. NOTE: A veteran cannot receive both Aid and Attendance and Housebound benefits at the same time.
  32. 32. How to Apply for A&A or Housebound Benefits: <ul><li>A veteran may apply for Aid and Attendance or Housebound benefits by writing to the VA regional office having jurisdiction of the claim, found online at .  </li></ul><ul><li>This is the office where the claim for pension benefits was filed.  </li></ul><ul><li>If the regional office of jurisdiction is not known, information on benefits may be requested from any VA regional office. </li></ul>
  33. 33. Details on Applying for the VA A&A or Housebound Benefits: <ul><li>Copies of evidence should be included </li></ul><ul><ul><li>A report from an attending physician, validating the need for A&A or Housebound type care. </li></ul></ul><ul><li>The report should be in sufficient detail to </li></ul><ul><ul><li>Determine whether there is disease or injury producing the need for daily care needs. </li></ul></ul><ul><ul><li>Determine whether the claimant is confined to the home or immediate premises. </li></ul></ul><ul><li>The report should indicate </li></ul><ul><ul><li>How well the individual gets around. </li></ul></ul><ul><ul><li>Where the individual goes, and what he or she is able to do during a typical day. </li></ul></ul>
  34. 34. Using Personal Resources
  35. 35. Many people find themselves funding private home care at least partly through personal resources.
  36. 36. Funding Long-Term Care From Personal Resources <ul><li>First assess the situation realistically, including all possible options for paying for care. </li></ul><ul><li>Consider how best to utilize the assets. </li></ul><ul><li>Potentially seek the advice of a financial planner for guidance on which investments should be liquidated first: homes, businesses, rental property or commercial leases, land owned, or farms may all provide potential funding sources. </li></ul>Source: “How to Fund Unexpected Care Costs from Personal Resources,”
  37. 37. Funding Long-Term Care from Personal Resources <ul><li>Consider the value of personal property: </li></ul><ul><ul><li>Antiques </li></ul></ul><ul><ul><li>Old coins </li></ul></ul><ul><ul><li>Jewelry </li></ul></ul><ul><ul><li>Art, or other collectibles </li></ul></ul><ul><ul><li>If there’s fine jewelry to sell, a jewelry store may offer a better price than a pawnshop. </li></ul></ul><ul><ul><li>Selling treasured collectibles typically brings higher prices if they are sold individually rather than selling an entire collection together in one sale, particularly if there are rare pieces. Have some of the better pieces appraised beforehand. </li></ul></ul>Source: “How to Fund Unexpected Care Costs from Personal Resources,”
  38. 38. Funding Long-Term Care from Personal Resources <ul><li>Look into pensions, annuities, or life insurance policies, which could provide cash flow. </li></ul><ul><li>Before delving into savings set aside for retirement, the situation should be discussed with an insurance agent. Many life insurance policies now offer an option that gives the policyholder the right to sell his or her policy for more than its cash value. </li></ul>Source: “How to Fund Unexpected Care Costs from Personal Resources,”
  39. 39. Funding Long-Term Care from Personal Resources <ul><li>A tax adviser can offer insight into how much gain would be realized when selling a home or other personal assets. </li></ul><ul><li>Work with him/her to get the maximum benefit from financial resources. </li></ul><ul><li>Applying for an equity line of credit on the home might be another possible solution. (HECMs have been already presented.) </li></ul>Source: “How to Fund Unexpected Care Costs from Personal Resources,”
  40. 40. Funding Long-Term Care from Personal Resources <ul><li>Discuss with other family members the option of sharing both the costs and caregiving duties involved in keeping elderly parents at home. </li></ul><ul><li>When family members work together to take on some of the caregiving tasks themselves, the expenses associated with providing care can be reduced. </li></ul><ul><li>Moving an elder parent into a family member’s home or moving into a parent’s home could be a practical alternative. </li></ul>Source: “How to Fund Unexpected Care Costs from Personal Resources,”
  41. 41. Additional Options: Paying for Home Care
  42. 42. So far, we’ve discussed LTCi, HECM, VA benefits, and using personal resources. There are three more potential options:
  43. 43. Three Additional Potential Options <ul><li>Disease-Specific Debilitation </li></ul><ul><li>Most major diseases, such as Alzheimer’s, Multiple Sclerosis, and cancer have programs in place to assist individuals with these particular illnesses. </li></ul><ul><li>Agencies supporting specific illnesses can be checked to determine local community resources. </li></ul><ul><li>Additionally, many religious organizations have some funds available for their members. </li></ul>
  44. 44. Three Additional Potential Options <ul><li>Office on Aging </li></ul><ul><li>This local agency is an excellent resource that can assist with finding information on available funds through county and state programs. </li></ul><ul><li>The information provided is available to the public and free of charge. To search for local agencies go to Senior Advice: . </li></ul>
  45. 45. Three Additional Potential Options <ul><li>Home Care Allowance </li></ul><ul><li>Some states offer a home care allowance through their Department of Social Services. </li></ul><ul><li>Applicants must usually be eligible for assistance from the Department such as Aid to the Needy and Disabled or Old Age Pension.  </li></ul><ul><li>In addition, recipients are typically evaluated for medical need.  </li></ul><ul><li>Income guidelines vary depending on age and severity of disability.  </li></ul>
  46. 46. Being creative with assistive devices, monitoring devices, some home retrofitting and a good long term care plan that fits the individual’s specific circumstances can also go a long way towards curbing the costs of home care.
  47. 47. Private duty agencies like American Companion Care do more than staff a caregiver to provide traditional in-home care offerings. By understanding the needs of the frail and maintaining connections with community resources and coordinating services as needed, American Companion Care broadens the scope of care, and the possibilities that in-home care can be a long-term sustainable option.
  48. 48. For More Information <ul><li>Contact American Companion Care for more information on how to help your loved one or to further discuss options to assist with the cost of home care. </li></ul><ul><li>American Companion Care 15461 South Acuff Street, Olathe, KS 66062 (913) 390-6300 [email_address] </li></ul>