NewRetirement Retirement News Digest : Long Term Care

The importance of long term healthcare

jberman — Fri, 20 Nov 2009 10:18:00 GMT

KGO News, November 18th, 2009

Can you afford NOT to have long term care? The long term care crisis and its impact on your family's future financial security.

Long term care crisis:

The cost of long term care can severely impact your family's future financial security. Requiring care in any setting is not a topic many of us want to talk about, for obvious reasons. But the fact is, 40 percent of Americans who need long term care are working age adults 18-64 - and this care comes with a very steep price tag.

For example, according to recent data from Genworth Financial the national average cost for one year of home care is more than $42,000.

According to Dr. Dychtwald's research, the biggest financial worry among the 55-and-older population is covering uninsured medical expenses during retirement.

Dychtwald adds that today people are living longer than ever before and this longevity revolution is creating an unprecedented "age wave." However, living longer creates a greater possibility of health issues along the way and the burden of care giving usually falls to the closest relative.

The key steps needed to secure financial peace of mind:

There are three things that the average individual ought to be thinking about when it comes to long-term care in terms of next steps.

Talk to your family members, this shouldn't be some sort of secret or something that people aren't comfortable discussing. You know it's... it's a fact of life in this more lived era.
Talk to a financial professional and that could be an insurance agent, a broker, an accountant, a lawyer, maybe you got a brother-in-law or a cousin who's in the business, talk to them about long-term care.
Don't just leave it vague and in the mist, write it down, take steps, make a plan and then execute against that plan.

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Universal Coverage: A Revenue Windfall?

jberman — Tue, 27 Oct 2009 00:54:00 GMT

The New York Times, October 24th, 2009

Arthur Ullian is president of the National Council on Spinal Cord Injury and co-author of two studies in the Proceedings of the National Academy of Sciences on the economics of health care. In a forthcoming analysis, Mr. Ullian, the demographer Kenneth G. Manton of Duke University, the statistician Dennis Tolley of Brigham Young University and others conclude that expanded access to health care will generate revenue and savings for the federal government that are not accounted for in official cost estimates. Mr. Ullian spoke with the freelance writer Anne Underwood.

You and your co-authors say that over the long term, improved health care will actually contribute billions of dollars to the Treasury, even without the taxes and service cuts that Congress is considering in various legislative proposals. How is that possible?

There are offsetting dollar gains that Congress and the Congressional Budget Office aren’t taking into account.

But the C.B.O. projects costs of around $800 billion over 10 years for the Senate Finance Committee bill, and so far that’s the cheapest of the proposals.

The projections are an enormous percent of G.D.P., and they’re not sustainable, which is what everyone is yelling about. But that’s because no one is taking into account the health improvements that will result from covering millions of the uninsured.

How does that help?

There are two parts to this theory. The first relates to the expansion of the labor force. We know from the National Long Term Care Survey that as a result of improvements in health care, active life expectancy in the United States has been increasing. In 1982, 74 percent of those aged 65 and older were healthy. By 2004, that had gone up to 81 percent. Projections for 2014 are between 84 and 85 percent.

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Helping helpers cope

jberman — Wed, 19 Aug 2009 09:41:00 GMT

Minneapolis Star-Tribune, August 17th, 2009

Three years ago, Tracy Beckman moved out of the house -- five years after his wife, Janel, was diagnosed with what probably is Alzheimer's disease.

"I just didn't know how to deal with it," said Beckman, 64, of St. Paul. "All my years as a problem-solver -- as a state legislator, teacher, a recovering alcoholic -- that didn't seem to help. I was in a lot of denial, a lot of pain, actually pretty selfish."

But six months later he was back home.

What changed? For one thing, help from Kathryn Ringham, a social worker at Wilder Services for the Elderly who teaches people how to be caregivers.

At an elder care forum organized by Sen. Amy Klobuchar, D-Minn., in St. Paul on Monday, Beckman described the challenges of caring for an ailing spouse and called for the expansion of coaching programs like the one that helped him.

A bill introduced by Klobuchar, the American Giving Care to Elders Act, would increase support for caregivers through a tax credit of up to $1,200 a year and expand support services such as caregiver coaching.

"This coaching has been a godsend for me," Beckman said. "Every two or three weeks, Kathryn checks in with me, and it's meant so much -- especially developing a plan of action. Life is easier with a plan."

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Message on long-term health care - plan ahead

jberman — Sat, 08 Aug 2009 07:50:00 GMT

Birmingham Post, August 6th, 2009

Anyone faced with funding long-term health care should look beyond equity release schemes or selling their homes.

That is the message from a West Midland firm of independent financial advisers keen to show that forward planning can be the answer to the care “lottery” for many pensioners.

Whether fees are met by local authorities or families often depends on where home care residents live, says McCarthy Taylor, which has offices in Worcester and Evesham.

Although the Government has introduced means testing, inconsistencies persist and many elderly people, often with severe illnesses, end up having to pay for long-term care themselves.

And even though reforms were announced this week to the funding of social care, they will would not cover accommodation costs for those in care homes, only the care element.

Given the economic situation, health ministers also said there was no chance of a new system being phased in before 2014 at the earliest.

Clive Collins, of McCarthy Taylor, says that, as care costs soar, many people are turning to equity release or are being forced to sell their homes.

“These, however, are not the only options available and, with careful financial planning, assets can be saved to pass down to future generations,” he said.

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When an insurance company denies long-term-care benefits, there's another way to get its attention

jberman — Sat, 11 Jul 2009 10:31:00 GMT

Dallas Star-Telegram, July 10th, 2009

Nancy Morrow was angry that her parents paid tens of thousands of dollars in long-term-care insurance premiums, but when her parents needed care, CNA Insurance Companies refused to pay.

The family hired a senior advocate for help, but that didn’t work. It also hired a lawyer.

I urged her to cut to the chase: Notify the Texas Department of Insurance.

The department is staffed with "a whole floor of people" in Austin who take calls from Texas consumers every day, a spokesman says. When it opens a case file, executives at insurance companies are quick to notice.

"Not to brag, but whenever we get involved, it catches the company’s attention," says Marilyn Devine, a senior complaints specialist at the department.

Catching a company’s attention will be easier in Texas after Sept. 1, when a new law gives the state insurance commissioner power to approve or disapprove long-term-care premiums and rate increases. Previously, the state accepted rates without the ability to reject them.

This increased regulation comes as companies that sell policies are raising premiums and increasing existing rates on longtime policyholders.

In the case of Morrow’s 83-year-old parents, Talmage and Vada DeWitt of Lubbock, the couple filed claims with CNA to cover payments for home helpers. He is blind, and she is disabled. CNA cited these reasons in rejecting the claims: The long-term care they were receiving was not in a facility. And their medical records were incomplete.

Long-term-care policies — which cover services needed when you can’t care for yourself because of a prolonged illness or disease, such as Alzheimer’s — have a strict set of requirements for paying claims. Meeting the requirements takes a lot of legwork, which is often difficult for elderly people to do on their own.

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Congress Airs Concerns on Long-Term Care Insurance

jberman — Thu, 18 Jun 2009 01:52:00 GMT

The New York Times, June 16th, 2009

As many as 7 million Americans have long-term care insurance policies, and many states confronting burgeoning deficits are urging consumers to buy this type of insurance as a way to protect Medicaid budgets. But at a recent Senate hearing, lawmakers and watchdog groups cautioned that greater consumer protections are needed.

“There are no guarantees that the policies purchased today will serve your needs 20 to 30 years down the road,” Diane Rowland, executive vice president of the Kaiser Family Foundation, told the Senate Special Committee on Aging earlier this month.

Consumers must balance premium affordability with the types of services they may want, the daily benefit amount, the length of coverage and other options, such as inflation protection. But personal needs and the marketplace can change in the decades between purchasing and using a policy, Ms. Rowland said.

Moreover, some purchasers find they can no longer afford the premiums, even after years of payments. And it is even more expensive to acquire coverage late in life. A long-term care policy costs almost twice as much when purchased at age 70 than it would have at age 60, according to a Kaiser policy brief (PDF).

Given this uncertainty and the increasing number of state Medicaid and private long-term care insurance partnerships, greater consumer protections are needed nationally, said Senator Herb Kohl, Democrat of Wisconsin and chairman of the aging committee.

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Kohl Seeks Regulation of Long-Term Care Insurance

jberman — Thu, 04 Jun 2009 08:50:00 GMT

Bloomberg, June 3rd, 2009

Long-term care insurance may not be a “cure-all” for the estimated 12 million Americans who will require such care by 2020, according to Senator Herb Kohl, chairman of the Senate Special Committee on Aging.

Providers such as Genworth Financial Inc. are reporting losses and others such as Conseco Inc. are increasing premiums, which raises questions about the viability of the industry, Kohl said at a Washington hearing today.

“We need to boost consumer protections and ensure the solvency of these products in the long run, and even then long- term care insurance may not be right for everyone,” said Kohl. “Long-term care insurance should not be considered as a cure- all.”

The Wisconsin Democrat introduced legislation today to provide a uniform way of handling claims, transferring policies between states and increasing premiums. Long-term care insurance should reflect standards set by the National Association of Insurance Commissioners, Kohl said.

The policies provide coverage to help pay for home-health aides or residence in a nursing home or assisted-living facility. Insurers have sold about 10 million of the policies since 1987, according to the Menlo Park, California-based Kaiser Family Foundation. Private insurance accounted for 9 percent of the almost $180 billion spent on long-term care services in 2006, said Kaiser, a nonprofit group focused on health-care policy.

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Health Care Costs During Retirement

jberman — Fri, 29 May 2009 01:18:00 GMT

The National Center for Policy Analysis, May 27th, 2009

Many people assume Medicare will cover most of their health care costs when they retire, and that Medicaid, the health care program for the poor, will cover them if they need nursing home care. However, neither program guarantees a low-cost ride through retirement.

Research has shown that seniors can expect Medicare to cover only about half of their medical expenses, on average. According to Fidelity Investments, the average senior retiring at age 65 this year will need $240,000 to pay the out-of-pocket costs of health care for the rest of his or her life.

Seniors and Out-of-Pocket Expenses. Seniors spend more per capita on out-of-pocket health care expenses than any other age group. The 2004 National Health Expenditure Survey found that:

Seniors age 65 and over spent an average of $4,888 per capita annually out of pocket for deductibles, copayments, premiums and other health care expenses not covered by insurance.
Their spending is more than twice as high as the average nonelderly adult.
The largest expenditures occurred among those 85 and older, who spent an average of $8,304, compared to $5,066 for seniors ages 75 to 84, and $3,851 for those 65 to 74.

Seniors and Medicare. There are three potential cost components to the Medicare program for seniors. Part A, which covers inpatient hospital stays and rehabilitation, is paid for through all employees' payroll taxes, but seniors still face copays and deductibles. Part B mainly covers physician services and is partially paid for through premiums deducted from seniors' Social Security benefits checks.

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Nearly Two-Thirds Face Risky Retirement Due to Long-Term Care Costs

tsaleen — Mon, 06 Apr 2009 14:54:00 GMT

ElderLawAnswers - April 1, 2009

A new report by the Center for Retirement Research at Boston College finds that nearly two-thirds of U.S. households are at risk of being unable to maintain their standard of living in retirement when possible long-term care costs are taken into consideration.

The report, "Long-Term Care Costs and the National Retirement Risk Index," looks at the percentage of households that would fall significantly short of their target retirement income if they do what they can to prepare for the possibility of long-term care costs, on top of health care and other post-retirement expenses.

If those who could afford to do so purchased a comprehensive long-term care insurance policy with a $3,500 annual premium, researchers found that 64 percent of households would still be at risk of a lowered standard of living in retirement. When the researchers assumed that households would instead pay for long-term care using the equity in their homes through a reverse mortgage, 65 percent would still be at risk in retirement.

The report's authors conclude that their findings "raise major concerns about the retirement security of baby boomers and succeeding generations."

For a link to the report, which analyzes 2006 data, click here.

For an Associated Press article on the report, click here.

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8 Tips for Paying for Health Care in Retirement

tsaleen — Wed, 18 Mar 2009 23:55:00 GMT

US News & World Report - March 16, 2009

It’s difficult to predict what your health care expenses will be in retirement. Jack Dickinson, 65, thought he was one of the lucky ones. His 34 years as a General Motors sales and marketing manager came with two gold-plated benefits: a pension and lifetime medical coverage. And Dickinson was lucky indeed--until GM scrapped retiree health care coverage this year for about 100,000 white-collar retirees, him included. The beleaguered auto giant did raise monthly pension payments by $300 to help retirees buy their own coverage. But "it does not replace, by any means, the excellent coverage that GM gave us," says Dickinson, a retiree in Hoover, Ala. "If you go on the open market and try to replace everything, it is not available." Here’s some tips on how to cope with health care expenses in retirement:

Don’t count on employer benefits. Most current employees will never face Dickinson's quandary because they won't be eligible for retiree health insurance through their former employer in the first place. Less than a third of firms with 200 or more workers offered retiree health benefits in 2008, down from the 66 percent that did so in 1988, according to a Kaiser Family Foundation survey. Among small companies, retiree coverage is much more rare: only 4 percent offer it. But even if your employer offers retiree health insurance, don't count on receiving benefits. Retiree health insurance agreements often include clauses that give the company the right to modify or terminate the program at any time. If benefits continue, retirees are likely to face higher premiums, increased out-of-pocket expenses, and tougher eligibility requirements. And there's nothing that safeguards retiree health insurance benefits like the federal Pension Benefit Guaranty Corp., which, in private-sector pension plans, pays workers if a plan or a company fails.

Try to make it to Medicare. How do you protect yourself from crippling medical bills in the face of nonexistent or disappearing health insurance? The answer might seem to be seeking out an employer that provides health care benefits until age 65, when you qualify for Medicare. Sounds simple enough, if you can manage to stay employed with company benefits in this tough economy. If you're laid off, find out if you're eligible for a spouse’s health plan and COBRA continuation coverage through your former company. That coverage lasts up to 18 months. The American Recovery and Reinvestment Act, passed in February, promises employees who were laid off between Sept. 1, 2008, and Dec. 31, 2009, a 65 percent subsidy toward COBRA premiums for up to nine months.

Workers who retire before they qualify for Medicare at age 65 often face the steepest health care costs. The average cost of premiums for employer-provided coverage for retirees under 65 is $13,308 a year, according to a Towers Perrin survey. The typical early retiree is expected to pick up $6,960 of that tab. But retirees who don't have employer-subsidized insurance or coverage through a spouse will pay even more. Costs vary widely for individuals. Those who have bad health habits or chronic illnesses generally pay more--if they can even get coverage.

Plan for Medicare costs. Retirees with Medicare face significant out-of-pocket costs. Major health care expenses include premiums for Medicare Part B (physician and outpatient hospital services) and Part D (prescription drug-related expenses), co-payments, coinsurance, deductibles, and excluded benefits like dental care, eyeglasses, and hearing aids. A couple retiring in 2010 would need nearly $206,000 in 2007 dollars to buy an annuity sufficient enough to cover out-of-pocket health care costs in retirement, according to the Center for Retirement Research at Boston College. A couple retiring in 2040 would need more than $491,000. Other studies come up with similarly large numbers. Fidelity Investments says a 65-year-old couple retiring in 2008 will need approximately $225,000 to cover medical costs in retirement. That doesn't even include over-the-counter medications, most dental services, and long-term care. The Employee Benefit Research Institute figures a married couple will need a staggering $305,000, just to have a 90 percent chance of being able to pay for all out-of-pocket retirement health expenses (the money could be paid in part out of retirement income, however.) Dickinson, who recently signed up for Medicare, runs a website for fellow GM retirees, where he posts tips for navigating the sign-up process. After GM announced retiree health-insurance cuts, the site's traffic quadrupled. "The older retirees losing their benefits are trying to do the gymnastics required to enter the Medicare maze," Dickinson says. "You've got to go to each provider and determine which one has the best coverage for you and at what premium price. It's very confusing."

Consider working longer. Many economists think most people should plan to work well past the current average retirement age, 63, in part to help finance health expenses. Working longer allows you to funnel extra cash into your nest egg, gives your investments more time to recover from recent market losses, and cuts the length of time your retirement stash needs to last. Workers age 50 and older can deposit up to $22,000 in a traditional tax-deferred 401(k) this year, up $1,500 from 2008. Social Security benefits also increase for each year you delay claiming benefits up until age 70. "People simply can't afford to cover their future health-care costs unless they have more assets, and people are responding to that by working longer," says Richard Johnson, an Urban Institute researcher. There is some evidence that continuing to work at a challenging--but not stressful--job or staying active and engaged by volunteering or taking up hobbies can help you stay healthy even longer. "Mental and physical exercise improve overall brain fitness," says Gene Cohen, director of the Center on Aging, Health, and Humanities at George Washington University. "Mastery and a sense of accomplishment can improve mental fitness by boosting the immune system."

Factor in long-term care. What's often the greatest retiree medical expense of all--long-term care—generally isn't covered by Medicare. Last year, a private nursing home room cost an average of $76,460 a year, or $209 per day, according to a Genworth Financial survey. Costs vary considerably by state, and range from an average of $125 a day in Louisiana to $515 in Alaska. More inexpensive options are available, but even they could torpedo most retirees' budgets. The average rate for a home-health aide is $19 an hour. That comes to $43,884 per year for 44 hours a week of care. A private one-bedroom unit in an assisted-living facility typically costs $36,090 annually. And the most frugal long-term care option, adult day care, still runs $15,236 per year, on average, for care five days a week, Genworth Financial found.

Consider long-term care insurance...carefully. Long-term-care insurance can help protect you from some of these catastrophic costs--at a hefty price. AARP estimates that a 65-year-old in good health can expect to pay between $2,000 and $3,000 a year for a policy that covers nursing-home and home care. And Fidelity Investments calculated that a couple, both 65 in 2008, would need $85,000 just to insure against a lifetime of long-term-care expenses. Before you buy long-term care insurance, you should get answers to plenty of questions: how to cancel the policy; what happens if you stop paying the premiums; how many times you can renew; how long coverage lasts; what the maximum payout is (and whether it is indexed for inflation); and what needs to happen before you can begin claiming your benefits. "These policies are written stating very extensively what they will cover, and 20 years later when you start using long-term-care services, there may be some new modality of service that is not covered by your plan," cautions Johnson. You can check up on the financial health of insurers at A.M. Best, Moody's, or Standard & Poor's and with your state insurance department.

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SEC accuses Sunwest Management of securities fraud

tsaleen — Tue, 03 Mar 2009 04:30:00 GMT

USA Today - March 2, 2009

A major corporate operator of assisted-living facilities and its founder were accused of a massive securities fraud Monday in what the Securities and Exchange Commission charged was a scheme that raised $300 million from investors who now face the loss of their money.

The allegations, the latest in a string of alleged scams uncovered amid the national recession, target Oregon-based Sunwest Management; Jon Harder, the firm's founder and former CEO; and several related entities and individuals.

Harder defense attorney Stephen English said his client had done nothing wrong. Lawyers for Sunwest did not immediately respond to a message seeking comment on the case.

At its peak in 2007, Sunwest managed more than 320 retirement facilities in 34 states and had estimated assets of $2 billion, the SEC said. But the company collapsed in December as Harder filed for bankruptcy court protection.

From 2006 through 2008, Harder allegedly raised $300 million from more than 1,300 investors who were told that their money would buy partial ownership interest in a specific retirement facility and provide a 10% annual investment return, the SEC charged.

But the money was allegedly commingled in a single fund that was used to pay operating expenses, investor returns and other costs. As a result, the SEC charged that misled investors didn't realize that more than half the retirement sites were losing money.

"As the national credit markets tightened in 2007 and 2008, the house of cards Harder had built came crashing down," the SEC charged. But Harder and co-defendants allegedly continued to raise funds from investors in what the SEC alleged became a virtual Ponzi scheme, in which money from new investors is used to pay earlier ones.

As of January, more than 100 of Sunwest's retirement homes were in foreclosure, receivership or bankruptcy, "resulting in the effective elimination" of the investors' financial stakes in the facilities, the SEC complaint charged.

"This is a tragic example of investors being defrauded out of millions of dollars because they were far more exposed to a downturn in the real estate market than they had been led to believe," said Marc Fagel, regional director of the SEC's San Francisco office.

English, however, said a federal court on Monday denied the SEC's request for an emergency asset freeze and appointment of a receiver to administer Sunwest and try to recover funds on behalf of investors.

The court ruled that a Sunwest operating agreement approved by Harder and investors as part of the bankruptcy "was sufficient to protect the interest" of investors and found that the proposed receiver "was an added level of oversight, which was not necessary," English said.

"It's just like any other lawsuit in which claims are made, and now they have to gather the proof for it," English said of the federal allegations.

Fagel said the SEC had sought the protections on investors' behalf and officials would now proceed with the lawsuit.

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AARP’s Stealth Fees Often Sting Seniors With Costlier Insurance

tsaleen — Sun, 15 Feb 2009 19:15:00 GMT

Bloomberg - December 4, 2008

Arthur Laupus joined AARP because he thought the nonprofit senior-citizen-advocacy group would make his retirement years easier. He signed up for an auto insurance policy endorsed by AARP, believing the advertising that said he would save money.

He didn’t. When Laupus, 71, compared his car insurance rate with a dozen other companies, he found he was paying twice the average. Why? One reason, he learned, was because AARP was taking a cut out of his premium before sending the money to Hartford Financial Services Group, the provider of the coverage.

Laupus stumbled onto something that many members of the world’s largest seniors’ organization don’t know: The group, formerly called American Association of Retired Persons, collects hundreds of millions of dollars annually from insurers who pay for AARP’s endorsement of their policies.

The insurance companies build the cost of these so-called royalties and fees, which amounted to $497.6 million in 2007, into the premiums they charge AARP members, according to AARP’s consolidated financial statement for that year.

AARP uses the royalties and fees to fund about half the expenses that pay for activities such as publishing brochures about health care and consumer fraud -- as well as for paying down the $200 million bond debt that funded the association’s marble and brass-studded Washington headquarters.

In addition, AARP holds clients’ insurance premiums for as long as a month and invests the money, which added $40.4 million to its revenue in 2007.

‘Fatting the Coffers’

“At the end of the day, it’s all about fattening the coffers of the organization,” says Thomas Orecchio, who was chairman of the Arlington Heights, Illinois-based National Association of Personal Financial Advisors until September. AARP, he says, is sponsoring insurance for its members at inflated prices.

“It’s the dirty little secret,” he says.

During the past decade, royalties and fees have made up an increasing percentage of AARP’s income, rising to 43 percent of its $1.17 billion in revenue in 2007 from 11 percent in 1999, according to AARP data.

Laupus, a former teacher in Baltimore, and millions of others joined AARP in the belief it would provide discounts, services and publications. The organization ranks behind only Consumer Reports and the American Red Cross as the most trusted large group that influences U.S. politics and business, a 2007 Harris Poll found.

AARP has helped millions with tax returns, estate planning and health care advice.

‘Turbulent Economy’

With stock markets around the world plunging, savings plans in turmoil and medical costs soaring, older Americans need an organization such as AARP in their corner.

“The turbulent economy puts more people in the difficult situation of being under- or uninsured,” says Iowa Republican Senator Charles Grassley. “That’s why we need to make sure individuals aren’t taken advantage of with misleading marketing, especially by a name brand advocate who carries a high level of trust.”

Grassley sent letters to AARP Chief Executive Officer William Novelli and state insurance commissioners Nov. 3 inquiring into whether the AARP misrepresented what is covered by some health insurance policies it sold. Four days later, Novelli announced AARP would review its marketing and suspend sales of those policies.

AARP’s mission to help seniors has been compromised by its reliance on royalties and fees, says Marilyn Moon, who was director of AARP’s Public Policy Institute from 1986 through 1989.

‘Conflict of Interest’

“There’s an inherent conflict of interest,” she says. “A lot of people there are trying to do good, but they’re ending up becoming very dependent on sources of income.”

Moon is now vice president and director of the health program at American Institutes for Research in Washington.

Novelli, who co-founded a public relations company in 1972, became CEO of AARP in 2001. Since then, the organization has increasingly focused on marketing as a means to increase revenue, Moon says.

AARP officials say the organization always gives priority to the needs of seniors.

“There is no conflict of interest between the marketing of products and services to our members and our policy work,” spokesman Adam Sohn says. “Policy always comes first.”

AARP declined requests to make Novelli available for comment.

‘Benefit From Our Brand’

John Wider, executive vice president of AARP Services Inc., a for-profit subsidiary, says AARP uses royalty revenue to fund its member services. In addition, he says, insurers selling products through AARP find royalty payments are worthwhile because AARP’s endorsement lowers insurance company marketing costs and increases sales.

“There is an efficiency they gain in being able to benefit from our brand,” he says.

Novelli, 67, has broadened AARP’s reach and increased its clout in Washington. The association recently joined with industry and labor groups in a campaign known as Divided We Fail. That effort is seeking ways to ensure health care for all Americans.

Novelli has expanded AARP’s marketing to include 17 types of insurance. The association collects royalties on each of those products. Its membership rose to 40 million from 35 million, and its total revenue grew to $1.17 billion in 2007 from $520 million when Novelli took charge.

Medicare Lobbying

Nowhere were AARP’s conflicting roles more evident than in its lobbying in support of a 2003 bill proposed by President George W. Bush to expand Medicare, the federal health insurance program for people older than 65.

The bill, which for the first time added a prescription drug plan to Medicare, passed by a vote of 220-215 in the House of Representatives and 54-44 in the Senate. Thousands of AARP members complained that the legislation was a bad deal for seniors because it provided incomplete coverage and raised costs for seniors with low income.

After the Medicare bill was signed into law by Bush in December 2003, AARP was able to expand its contract with Minnetonka, Minnesota-based UnitedHealth Group Inc., which underwrites AARP’s Medicare supplemental insurance plan.

AARP increased its annual revenue from royalties by $197 million to $497.6 million from 2003 to 2007.

Not the Least Expensive

AARP advertises that its Medicare supplemental insurance can save people thousands of dollars. While every type of supplemental policy sold by all companies must offer the same exact coverage under federal rules, AARP doesn’t sell the least expensive.

The AARP/UnitedHealth basic policy costs $582 a year more than a lower-cost competitor in New York and $428 more in Los Angeles, according to data on Medicare’s Web page. AARP spokesman Sohn says everyone should shop carefully.

“The products and services AARP makes available are competitively priced,” he says. “Price is not the only factor. Service and features need to be factored in to determine full value.”

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'Tis the season for families to talk about finances

tsaleen — Fri, 02 Jan 2009 18:16:00 GMT

Christian Science Monitor - December 22, 2008

As families gather to celebrate Christmas this week, money could be an unpleasant subject, given pronounced declines in real estate and stock markets. But now more than ever, families should use this as an opportunity to discuss their financial situation.

The idea may be especially difficult for aging parents, reluctant to divulge sensitive financial information. Some have managed their money more wisely than their baby boomer children and do not wish to have their decisions second-guessed. Perhaps they are even fearful that their independence is being usurped.

Yet elderly parents need to be assured that nearly everyone has experienced significant losses this year. Point out that these losses are the result of market volatility, not a lack of knowledge or poor decisions. As the conversation moves along, attempt to address these four areas:

Investments

In case your parents have done well in the stock market, ask them to share their successful practices and advice. But also be sure to talk about:

•Possible tax treatments for investment losses, including whether they should take capital-gains losses in 2008 or defer them to 2009.

•Adjusting their asset allocation to protect a portfolio's remaining value.

•How to deal with less liquidity and credit restrictions, assuming an extended economic downturn through 2010.

Action tip: Determine how portfolio losses will affect retirement plans. Parents might need to delay retirement, working longer. If already retired, talk about whether parents can stretch their budget to fund their current lifestyle. If not, siblings should discuss if they are able and prepared to contribute to their parents' finances.

Real estate

The family home generally represents 40 percent of a middle-class family's net worth. An update on neighborhood property trends will alert you to any serious erosion of home values. If no family member is familiar with recent sales activity, seek advice from a local real estate agent rather than relying solely on online resources. Home values vary widely by neighborhood, as do individual property characteristics, sales, and foreclosure activity.

Reduced real estate values could dramatically affect the ability of parents to sell their home within a five-year period with an expected profit. A delayed sale will affect any plans by elder parents to relocate to a retirement community or assisted-care facility.

Action tip: Investigate a reverse mortgage as a way to keep parents in their own home. This is not an option, unless they are willing to stay in their home for an extended number of years. Parents might also consider sharing their home with others to defray living costs.

Long-term care

According to the US Department of Health and Human Services, approximately 70 percent of Americans age 65 or over will require long-term-care services, and over 40 percent will need nursing-home care. An October survey by Metlife reveals that a private room in a nursing home costs $77,380 a year on average, and a year at an assisted living community averages $36,372.

For those with assets below $150,000, Medicaid may offer a better alternative to long-term care insurance, as they will probably exhaust their assets and be able to qualify for government support. Parents with assets above $3 million should weigh whether they have the resources needed to cover long-term-care costs themselves.

Action tip: Secure long-term-care insurance for parents who lack a policy, are in their 60s, and are unlikely to qualify for Medicaid. Customize your plan and get multiple quotes. For more information, visit longtermcare.gov.

Power of attorney and trusts

Some parents already may have a multigenerational estate plan to transfer assets. Such plans should be reviewed if investment losses have been substantial. If the estate is smaller than projected, it may be necessary to prioritize inheritance claims and possibly delete individuals or charitable foundations.

If your parents lack an estate plan, ask a financial planner or accountant to recommend an attorney. Check with the State Bar Association for lawyers who handle trusts and estates. If the estate has complicated assets, such as rental properties, make sure the lawyer has expertise in that area.

Action tip: Prepare an estate worksheet that includes the current value of all property. It's essential to share with the family the location of the will and contact information for its designated executor. Parents should create a master family file to store key documents with a complete list of all real estate, banking, insurance, and investment-account numbers and contact information.

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Fit, Not Frail: Exercise as a Tonic for Aging

jberman — Sat, 28 Jun 2008 04:50:00 GMT

The New York Times, June 24 2008

Fact: Every hour of every day, 330 Americans turn 60.

Fact: By 2030, one in five Americans will be older than 65.

Fact: The number of people over 100 doubles every decade.

Fact: As they age, people lose muscle mass and strength, flexibility and bone.

Fact: The resulting frailty leads to a loss of mobility and independence.

The last two facts may sound discouraging. But they can be countered by another. Regular participation in aerobics, strength training and balance and flexibility exercises can delay and may even prevent a life-limiting loss of physical abilities into one’s 90s and beyond.

This last fact has given rise to a new group of professionals who specialize in what they call “active aging” and an updated series of physical activity recommendations for older adults from the American Heart Association and the American College of Sports Medicine. These recommendations are expected to match new federal activity guidelines due in October from the United States Health and Human Services Department.

But you need not — indeed should not — wait for the government. Even if you have a chronic health problem or physical limitation, there are safe ways to improve fitness and well-being. Any delay can increase the risk of injury and make it harder to recoup your losses.

Miriam E. Nelson, director of the John Hancock Center for Physical Activity and Nutrition at Tufts University in Boston and lead author of the new recommendations, observed last fall in The Journal on Active Aging that “with every increasing decade of age, people become less and less active.”

“But,” Dr. Nelson said, “the evidence shows that with every increasing decade, exercise becomes more important in terms of quality of life, independence and having a full life. So as of now, Americans are not on the right path.”

Jim Concotelli of the Horizon Bay Senior Communities in Tampa, who oversees fitness and wellness program development for communities for the elderly in several states, noted this year in The Journal on Active Aging that many older Americans were unfamiliar with exercise activities and feared that they would cause injury and pain, especially if they have arthritis or other chronic problems. Yet by strengthening muscles, he said, they can improve joints and bones and function with less pain and less risk of injury.

The key is start slowly and build gradually as ability and strength improve. Most important is simply to start — now— perhaps under the guidance of a fitness professional or by creating a program based on the guidelines outlined here.

Fidelity: $85k needed for long-term care costs

jberman — Sat, 28 Jun 2008 04:47:00 GMT

The Boston Globe, June 26, 2008

A 65-year-old couple needs $85,000 on average to cover insurance costs for long-term care such as nursing home stays in retirement, according to a study to be released Thursday by Fidelity Investments.

The finding underscores the need to financially prepare for the possibility of eventually needing assistance to get by -- a burden that often falls on elders' adult children, who can jeopardize their own finances by caring for an ailing parent while finding they must cut their work hours.

Setting aside adequate savings heading into retirement can help defuse family tensions should physical or mental illness hit parents who slowly realize they can no longer perform tasks such as household chores, or bathe or dress on their own.

"If you plan adequately and you have the ability to pay for assistance in whatever form that might be, it makes it easier on everybody if you can do that," said Kathleen Kelly, executive director of the Family Caregiver Alliance, a San Francisco-based nonprofit that helps families cope with adults' disabilities. "Families really want to do the right thing, but there are so many pressures on them."

Fidelity, a Boston-based financial services firm whose mainstay is mutual funds, surveyed insurers offering long-term care policies to come up with the estimate that a couple aged 65 this year can expect to need $85,000 to cover annual premiums for long-term care coverage throughout retirement.