As our population ages, there has been an increased demand for skilled nursing facilities. This type of care can be extremely expensive ranging from $40,000 to $80,000 annually depending on the state and level of care. Unfortunately, for seniors, Medicare coverage for nursing homes is very limited. Therefore, individuals are forced to look for alternative ways of paying for care such as long-term care insurance, reverse mortgages and supplemental insurance plans. Some individuals have chosen a different route, using Medicaid.
Medicaid, a health program designed for US citizens and permanent legal residents with low incomes and limited resources, is the largest source of funding for medical and health related services nationwide and implemented on a state level. In the case of nursing homes, Medicaid will cover some of the expenses but the senior must go through an asset review that goes back 5 years.
In order for the senior to protect assets for future generations, experts suggest financial planning before you become elderly or sick. One such way of protecting your assets is to buy a Medicaid Complaint Annuity. According to Krause Financial Services website, a Medicaid Compliant Annuity is a single premium immediate annuity with an added restrictions endorsement that makes the annuity irrevocable and non-assignable. It converts a spend-down amount into an income stream. By eliminating the spend-down amount annuitant becomes eligible for Medicaid benefits.
In order for the annuity to be complaint, it must be irrevocable and non-assignable, it must be actuarially sound, have no deferral and no balloon payments, and the state Medicaid program must be named as the primary beneficiary. Some other restrictions do apply.
As the population continues to age, Medicare costs are going to continue to increase. These costs are then passed along to the state and federal government who are dealing with reduced revenue and budget cuts. According to CNNMoney.com, “without any policy changes, the vast majority of federal tax revenue will be eaten up by just four things: interest on the debt, Medicare, Medicaid and Social Security.” Which means a third of the federal budget will have to be financed in order to pay for other programs as well as defense. Unfortunately, the taxpayers will ultimately pay with increased taxes, reduced services and other economic woos.
For many years, structured settlement factoring companies have tried to purchase future payments from Medicaid Complaint Annuities. This would have been beneficial to states because it would have given the annuitant money to pay for their care instead of making it the burden of the taxpayers.
In a recent press release, Krause mentioned that they teamed up with a factoring company, “to provide a formal written letter stating that they are unable to purchase the policy due to the provisions, if it is in fact irrevocable and non-assignable”.
According to Rescue Capital Vice President John Zepeda, “The purpose of the letter is to show whether an annuity, specifically a Medicaid Annuity, has a value on the secondary market”. In other words, can the annuity holder sell the annuity for cash?” Zepeda goes on to say, “Each annuity contract must be reviewed on a case-by-case basis, whether there is value on the secondary market or not, there is no guarantee one will qualify for Medicaid benefits.”
The Washington Post recently stated that 40 states are projecting billions of dollars in budget shortfalls for fiscal 2012. Many of them have some sort of balanced-budget law which requires them to close the gap between the revenue they take in and their expenses. 23 states have proposed major cuts to health-care services while at least 14 states have proposed layoffs or benefit cuts to state workers. 16 states proposed cuts in pre-kindergarten and/or K-12 spending. 15 states have proposed cuts in higher education while at least 8 states plan to introduce revenue raising measures to help balance spending cuts.
As many states are struggling to provide essential services for their residents this is truly disappointing. Instead of helping those who really need assistance because they lost their jobs as well as their health insurance and are struggling to feed their families, we are paying for the medical expenses of individuals with means. In 1965, when Medicaid was created, its intent was to help the poor; apparently this is no longer the case.
When Wells Fargo, the largest reverse mortgage provider, announced the cancellation of their reverse mortgage program many cash-strapped seniors were left scrambling for ways to get money. While many seniors thought reverse mortgages were their only answer, they will be presently surprised to discover they have other, less restrictive options available to them.
According to John Zepeda, Vice President of Rescue Capital, “Many individuals, especially seniors, are unaware that they can sell a portion of their future structured settlement, annuity, life insurance, royalty or pension payments for cash.” Zepeda further stated, “Since our rates are more competitive than credit cards or bank loans we see many people in their 40’s, 50’s and 60’s looking to sell in order to pay for home repairs or eliminate debt.”
Unlike reverse mortgages, when you sell your future payments it is not a loan consequently there is no money that needs to be paid back. With many reverse mortgages an extended, but temporary, nursing home stay can force the sale of the home leaving the senior homeless. Selling your assets for cash has no bearing on homeownership therefore seniors can come and go as they please without the fear of losing their homes.
In addition to the compound interest, reverse mortgage borrowers must pay significant upfront costs including origination fees and closing costs. These costs tend to be greater than the costs associated with the selling of your future payments. In addition, younger individuals may also have the option of selling a portion of their assets for cash. Reverse mortgages are restricted to homeowners 62 years of age or older.
Financial experts are also quick to point out the potential for Medicaid qualification issues with reverse mortgages. Therefore if you are a senior with an illiquid asset and a need for money you owe it to yourself to investigate selling your future payments. With competitive rates and less restrictions, selling your payments may give you the flexibility you need. Since every financial situation is different so it is important to discuss your finances with a trusted advisor such as an eldercare attorney.
To learn more about Rescue Capital and how you can sell your assets for cash, call 866.688.3532.
The National Structured Settlement Trade Association (NSSTA) has reported that New York State has amended its recovery law for infants involved in a birth-related neurological injury. The law, which became effective April 1, 2011, states that there can be no recovery by infants for future medical care where the cause of action is a birth-related neurological injury.
The amendment is part of New York Governor Andrew Cuomo’s plan to reduce medical malpractice premiums in the state. As part of his Budget Bill, Cuomo established The New York State Medical Indemnity fund to pay for the future healthcare costs associated with a birth-related neurological injury.
A birth-related neurological injury is defined as an injury to the brain or spinal cord of a infant caused by the deprivation of oxygen or mechanical injury occurring in the course of labor, delivery or resuscitation or by other medical services provided or not provided during delivery admission that rendered the infant with a permanent and substantial motor impairment or with a developmental disability.
According to the NSSTA, this legislation was previously introduced during Eliot Spitzer’s term but lost momentum after his resignation. Previously, the thought was the fund would reduce Medicaid costs for medical care post-settlement, as well as hospital costs in settling medical malpractice cases.
