Senior Care Stories

Entries categorized as ‘Insurance’

Tips for Hiring Help for Your Senior Parent

January 25, 2010 · 2 Comments

By Joe Ponepinto

Many seniors who are healthy enough to stay in their homes, rather than move to a care facility or move in with relatives, prefer to remain in an environment that they know and feel comfortable in. But often these seniors need a little help around the house, whether it’s cleaning, doing laundry, or personal care like bathing. If children can’t provide it, then hiring a service or agency may be an option.

Before you or your parent enters into such an arrangement, there are a few steps to consider to make sure the safety of the senior is not at stake. Here are a few tips for hiring in-home help for seniors. These come from the California Bar Foundation.

  • Before talking to representatives of in-home services, assess the senior’s needs to determine the level of service needed. Decide how much you can afford. Then, when you do talk with agency reps, you won’t be as easily persuaded to pay for services that are not needed.
  • Seek referrals. If you don’t know anyone who can provide them, visit the local Area Agency on Aging web site.
  • Find out if Medicare covers any of the cost.
  • Ask many questions. Ask about the agency’s screening and training for caregivers. Do they conduct background checks? Is the agency bonded? Also determine whether the agency is responsible for caregiver taxes and insurance.
  • If you or your parent is responsible for taxes (usually if you hire someone independent of an agency), visit your state’s official web site to determine what they are.
  • Once a person or company is hired, take precautions in the home to safeguard valuables and important documents. Move them to another location or lock them up. Make sure things like Social Security numbers and bank account information are locked up too.

Categories: Care Givers · Elder Heath · Family Issues · Financial Issues · Insurance · Outside Resources
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Congress Debates Adding Long-Term Care to Health Bill

November 22, 2009 · 1 Comment

By Joe Ponepinto

Recently the House of Representatives voted to include a long-term care benefit in the pending health-care legislation. The Senate is still debating whether to include that option. Whatever they decide, a federal program would likely only cover part of the cost of long-term care for most people. That means the decisions about whether and when to purchase this coverage are still up the individual.

Long-term care insurance requires policyholders to pay premiums in advance of them needing a long-term care facility. Premiums vary widely depending on the insured’s age. According to Consumer Reports, a plan that costs a 50-year-old $1,625 annually will run a 60-year-old $3,100 and a 70-year-old $7,575. So it might seem that purchasing earlier would save money, and many insurance agents encourage people as young as 40 to buy at a lower monthly cost. But consider that you can’t actually use the policy until you qualify for what is defined in the policy as “long-term care,” which for many people isn’t until age 80 or beyond. That means up to 40 years of premiums, or more, with no return. Although there’s no perfect age to begin coverage, some experts say 60 is a good time to start. But also remember that it is harder to qualify for a policy as you get older. One out of four 65-year-olds flunk the physical; at 75, it’s one in three.

Whether you need it or not is another matter. Currently, average nursing-home costs for a semiprivate room are $198 a day, while home health aides get $21 per hour, according to a survey from MetLife Inc.’s Mature Market Institute. (A pdf file of the survey is here.) Those rates are bound to go up. The federal benefit being discussed would pay only $75 per day, according to the Congressional Budget Office. The costs can deplete an average person’s savings very quickly. Personal and family health histories can be factors in determining when you might need this benefit, but no one can predict this with any accuracy.

If you do decide to purchase long-term care coverage, one of the most important aspects to weigh is what, exactly, the policy considers to be the qualification for long-term care. Policies vary widely in what they will pay for. Many only pay 50 percent for in-home care, so at $10.50 per hour it adds up fast.

A federal option for long-term care would eventually change how much insurance each person needs, but it probably won’t eliminate the need to carry some additional insurance. It’s good to understand the options no matter what the government decides.

Categories: Care Givers · Elder Heath · Family Issues · Financial Issues · Insurance · Outside Resources
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Medicaid Yields Hardships As Well As Benefits

November 19, 2009 · 2 Comments

One of our readers has submitted  a guest column regarding his experiences with Medicare. The names have been withheld by request.

My mother was never very affluent. So when it came time for her to move into an assisted living facility for the treatment of Alzheimer’s disease, she was not financially prepared for it. Eventually, we had to turn to state Medicaid for assistance, but we were very surprised at the restrictions imposed on her finances.

In our state, at the time my mother applied for assistance, a person could have no more than $1500 to her name in cash and assets. Since my mother had more, we (believe it or not) had to sell off all her assets and give the excess to the state government for use in paying for Medicaid. The excess, and any income she had, including Social Security, was to be used first to cover costs before state help kicked in.

We were lucky in that her living facility had staff who were very helpful in navigating the state’s legal system. Other facilities may not be as prepared. But we realized while it was happening that my mother was essentially becoming a ward of the state—not that we expected her to recover, but in effect she no longer had an independent future.

In retrospect, we could have tried to have her “gift” the excess assets to her relatives (up to the federal tax-exempt limit) before applying for Medicaid, but even that strategy is difficult, since in our state, Medicaid looks back three years to figure net worth, to ensure the person is cognizant enough to understand what she is giving away. Who can say three years before Alzheimer’s care is needed that it is inevitable?

Think carefully about your parent’s future. It’s much better to be prepared for the possibility of having to use state Medicaid than to have to deal with it suddenly, as we did. If a long-term care insurance policy is an option, you should investigate it.

Keep in mind that Medicaid, although a national program, is also governed by individual state law and the requirements and services vary from state to state, sometimes greatly. But the best advice, if you anticipate that your parent might need it in the next few years, is to learn as much as you can about the program where you live, and prepare your parent’s finances so s/he gets the most help for the least impact.

Categories: Financial Issues · General Information · Insurance
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Reverse Mortgages Are Not the Easy Money They May Appear to Be

November 16, 2009 · 1 Comment

Despite the downturns in the housing market and the economy in general, one segment of the real estate loan industry that continues to grow is the reverse mortgage market—up 37 percent in 2008 according to Consumer Reports. In their advertising efforts, reverse mortgage lenders sometimes make these deals look like easy money for seniors. But there are many considerations that potential borrowers, and the adult children who help care for them, should be aware of before signing any paperwork.

The principle behind a reverse mortgage is simple. Seniors in need of money—to pay for medical expenses, mounting bills, to maintain a lifestyle; almost any reason is accepted—can borrow against the equity in their primary homes. But a reverse mortgage is not like an equity line of credit, in which the deal is based on income and the borrower must begin paying the loan back immediately. Instead, the lender pays the homeowner the equity in either a lump sum or regular payments, and no payment against the loan is due until the borrower(s) no longer use the home. When that event occurs, however, whether through the death of the borrower(s) or moving away, the loan becomes due in full. Usually the borrower(s) or their heirs pay off the loan with the sale of the home.

The good news is that even if the borrower(s) lives another 30 or more years, no payments are due and they get to stay in their home all that time. If that is the case, the value of the home will probably have gone up significantly and the loan balance will be no problem to pay off.

But if the borrower(s) pass away or move after only a few years, it could create a financial hardship. Here’s why: Reverse mortgages are very expensive loans, with many up-front and ongoing fees. The up-front fees can be included in the loan, but then they continue to accrue interest. Again, according to Consumer Reports, the up-front fees like mortgage insurance, origination fees and closing costs average about $15,000 on a $300,000 home. Another $15,000 in costs comes from ongoing insurance premiums and service fees. If the borrower(s) haven’t stayed in the home long enough for the value to go up, then they won’t have the means to pay the loan plus interest. Figure this means staying in that home for 10 years at least, but that doesn’t even include the possibility of a real estate devaluation, such as we are in now. People whose reverse mortgages have become due in the last two years may be having a very tough time paying them—that includes heirs who become responsible for their parents’ estates.

One particular scam to watch out for is unscrupulous reverse mortgage lenders who convince senior couples who have an age difference to apply for the reverse mortgage under the name of the older spouse only, to make it easier to qualify, by taking the younger person’s name off the title. But if the older spouse dies, then the younger one is left with the bill, and no claim to the home. Another scam caregivers should monitor is financial advisers who convince seniors to take equity money to put into “sure thing” investments. If the investment doesn’t work out, the borrower(s) still has to pay off the loan.

Considering the potential problems such an arrangement can cause, it’s best to be very, very careful before entering into a reverse mortgage. There are many online and local resources that can help you make a decision, and we recommend consulting a variety of them before moving ahead. Be careful about online sources, though. Many reverse mortgage lenders masquerade as unbiased sites designed to “guide” visitors to an informed decision about the product, but their information is often overwhelmingly one-sided about the benefits of reverse mortgages. If the site contains a “reverse mortgage calculator,” or a link to apply for a loan, chances are they are in the business of selling reverse mortgages and therefore their information is biased.

We especially urge children of senior parents to remain involved in their parents’ finances to guard against unnecessary spending and bad deals.

Categories: Family Issues · Financial Issues · Insurance
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Do Seniors Need Life Insurance?

October 28, 2009 · 4 Comments

My mother in law recently retired and was approached by a life insurance salesman who pressured her to “take care of her family when the time came.” But for a senior on a fixed income, is life insurance a good idea?

The cost of life insurance for someone over 65 can be quite high, since the chances that person will pass away are substantially higher than those of a younger person. But even if the senior can afford it, the real question seems to be whether it is necessary for the benefit of the beneficiaries, especially if they are the children of that senior. At that point in their lives, most children are no longer dependents, but are self-sufficient and don’t need for their parents to carry a financial burden to ensure their future.

But many senior parents, despite the change in relationship with their children, maintain a sense of responsibility for their welfare. When offered a chance to do something for their kids, especially when that something is wrapped in the right language, they will take it, no matter what the cost is to them.

In my mother in law’s case, we were able to talk her out of spending nearly $200 per month for the insurance—money that could be better spent on living expenses, travel or even gifts for the grandkids—but it was surprisingly difficult. Mom still felt as though it was her role to make sure we, and her other children, were provided for.

It may be a good idea to review all the insurance policies your parents own to determine whether they are an accurate reflection of the actual needs of both them, and their families. If you decide life insurance is a good option, you might want to shop around using an online life insurance brokerage that can compare multiple rates.

Some general rules when looking for insurance:

  • Get All Insurance Proposals in Writing
  • Don’t Feel Pressured. If your insurance agent is making you feel pressured to make a decision then maybe you need to find a new agent.
  • Understand First, Sign Later. Don’t ever sign something you have not read and understand.
  • Know Who You Are With. Make sure the insurance agent, broker and insurance company are properly licensed—you can contact your state insurance commissioner to find out who is licensed in your state.
  • Obtain Full Disclosures. Ask for a full disclosure of all information relating to the benefits and possible negative consequences if you replace your existing annuity.

Categories: Family Issues · Financial Issues · Insurance
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