Loading Please wait, logging in.
Join ALFA Member Login RSS Feed
Tagline Image
Bookmark and Share  

Dwindling Savings Puts Spotlight on Supplemental Income Options

Written by Alyssa Gerace of Senior Housing News for ALFA Update

In the aftermath of the Great Recession, the need for—and awareness of—supplemental options for paying for senior living has grown substantially, spurring the growth of relationships between senior living providers and senior funding sources.

The economic downturn, burgeoning senior population, and ongoing budget crisis have combined to create an environment in which a growing number of seniors struggle to leverage their home equity with a lessening ability to rely on government programs to fund their retirement living.

In the near term, seniors whose investments took a hit while home values fell sharply are feeling the impact the most, and it shows in the heightened awareness of prospective senior living residents, says Jayne Sallerson, executive vice president of sales and marketing at Emeritus Senior Living.

“Before the economic downturn, unless someone brought up a financial barrier, our salespeople weren’t as adept at educating consumers,” she says. “Now, people are so much more aware; they’re more cognizant [of supplemental funding options] and they’re asking about them.”

The number one resource people turn to, in Sallerson’s experience, is the VA benefits program for Aid & Assistance. Qualified veterans and their spouses can apply to the program to get monthly benefits to help cover the cost of assisted living care.

While families can go on their own to a VA office to learn more about and apply for the Aid & Assistance Program, the application process can be complicated and in some cases take up to nine months for the funding to come through.

The Great Recession essentially left many seniors trapped in their homes and sparked the need for interim financing as potential senior living residents wait for their houses to sell, or for VA benefits to kick in, says Elias Papasavvas, founder and CEO of Elderlife Financial Services, whose company provides lines of credit used to fund senior care.

The typical consumers calling Elderlife Financial for help hadn’t planned for a move into a needs-based senior living community, whether for themselves or a loved one, and weren’t financially prepared.

“There was a significant spike in requests by families [following the recession],” says Papasavvas.

Good economy or bad economy, there will be a need for this transitional financing, he continues. What will likely change is the amount of time it takes to repay the loan.

“In a good economy it may be a few less months the credit is outstanding, compared to in a bad economy where it takes longer to sell the house,” he says.

These days, the housing market is showing signs of a recovery as values slowly regain ground. But the economy is only one of three drivers that ensure the ongoing need for supplemental financing options. The other two—demographics and the debt crisis—aren’t going away.

“[Even] if the economy were to recover to pre-2008 levels, it would have no diminishing impact on our business,” says Chris Orestis, co-founder and CEO of Life Care Funding Group, which converts life insurance policies to long-term care benefits.

Seniors with life insurance policies are ineligible for Medicaid. Rather than abandoning those policies, converting them into benefits can increase the timeline for privately paying for senior care by an average of 15 to 18 months, depending on policy size and care needs.

Although LifeCare Funding was founded just five years ago, its volume of business has grown by at least 100 percent each year, Orestis estimates. Today, the company has more than 4,000 senior living communities in its program—a number that continues to multiply.

That’s not likely to change, Sallerson says. While VA benefits and interim line-of-credit financing are probably the most popular options for senior care funding, life insurance policy conversions will likely increase.

“I think this awareness will stick,” says Sallerson. “People are going to continue to educate. The baby boomers are coming, and a lot of them don’t have as much savings as the existing customers right now.”

At this point, many supplemental financial services are still “barely scratching the surface” of market potential, says Orestis.

“There’s no end in sight in terms of the number of seniors and those in the long-term care industry who can use our program,” says Orestis. “Long-term care services and providers have to look for how to educate and open up opportunities for consumers to access as many private pay options as possible.”

 
Suggested Articles:

7/21/2016
Consumer Funding Resources, Facts and Figures, Financing Senior Living – Consumer Education, Health Care, Long Term Care Insurance, Long Term Care Insurance Education, News, Research
Total health spending growth is expected to average 5.8 percent annually from 2015 to 2025, but is at a lower growth rate that the previous two decade...
7/21/2016
Financing Senior Living – Consumer Education, Health Care, Human Resources and Organizational Development, Long Term Care Insurance, Long Term Care Insurance Education, News, Organization Development, Organizational Culture, Staffing, Staffing & Performance
Some federal employees could see long-term care insurance rate increases of up to 126 percent beginning November 1, according to the Office of Personn...
7/13/2016
Core Principles, Elder Abuse, Family Relations, Financing Senior Living – Consumer Education, News, Resident and Family Services
The Administration on Community Living has announced grant awards of approximately $1.2 million designed to help older adults have access to legal ser...
6/29/2016
Greater integration is needed between the nation’s health care and housing systems(pdf) to help manage chronic disease, improve health outcomes for se...
6/29/2016
ALFA's Public Policy Positions, Engage, Facts and Figures, Finance, Financing Senior Living – Consumer Education, News, Public Policy
Americans face an alarming $7.7 trillion gap between what they actually have saved for retirement and what they will need, said the head of the Senate...
6/8/2016
Facts and Figures, Financing Senior Living – Consumer Education, Insurance, Long Term Care Insurance Education, Medicaid, Research
A long term services and supports catastrophic insurance program could improve the way LTSS needs are financed in the United States, according to a re...
5/19/2016
Advocacy, CEO, cheatsheet, Employee Compensation, Facts and Figures, Finance, Legislation, Medicaid, Medicaid, Public Policy, Staffing, Staffing & Performance
The Department of Labor this week finalized the “white collar” rule, which increases the salary threshold for workers who qualify for overtime pay. Th...
5/19/2016
CEO, cheatsheet, Clinical Quality and Quality Care Delivery, End of Life, Facts and Figures, Health and Wellness, Health Care, Medicare, Research, Wellness Program
The new Medicare system for reimbursing providers outlined in the Medicare Access and CHIP Reauthorization Act, or MACRA, may not adequately reward go...
5/19/2016
Business Planning, CEO, cheatsheet, Consumer Intelligence, Facts and Figures, Financing Senior Living – Consumer Education, Growth Strategies, Research
While the costs of long-term care continue to rise, assisted living continues on a slower growth trajectory than other types of long term care, accord...
4/6/2016
Consumer Intelligence, Facts and Figures, Financing Senior Living – Consumer Education, Reports
American women are a bit more optimistic about their financial futures compared to a year ago, according to a new survey from investment management fi...
 
09/25/2012


Additional Resources