ASHCF Applauds Bipartisan Legislation to Empower Seniors to Use Life Insurance Policies to Pay for Health Care Costs

The Alliance for Senior Health Care Financing today applauded House Ways and Means Committee members Rep. Kenny Marchant (R-TX) and Rep. Brian Higgins (D-NY) for introducing H.R. 7203, which would permit seniors  to use life insurance policies they already own to fund a wide range of health care costs, including long-term care expenses and long-term care insurance premiums.

H.R. 7203 would allow the proceeds of a life settlement—the sale of a life insurance policy for a market value return—to be rolled over, tax-free, into accounts dedicated to funding permitted health care expenses.  Distributions from the accounts would not be taxed if used for permitted expenses.  Distributions for unauthorized purposes would be subject to both income taxes and penalties.  Any undistributed amounts in the accounts, including investment earnings, would not be taxed during the lifetime of the account holder or such person’s spouse.

Americans own their life insurance policies, which they have a right to sell like any other asset.  Seniors may choose to sell their policies because they no longer need them, or they can no longer afford the often escalating premiums.  Selling policies in a competitive and regulated life settlement market is often a far superior option to lapsing or surrendering policies back to the insurance company.  

Life settlements – which are regulated in 43 states that are home to over 90 percent of the U.S. population—provide valuable resources for seniors in retirement.   Life settlements provide many seniors—and their families—additional resources to maintain their standard of living, to live independently, and to pay for such things as housing, rising energy costs, and health care.

A 2017 National Association of Insurance Commissioners report identified life settlements as “one option seniors might use to generate resources to pay for their long-term care needs.”   The financial resources from life settlements can help seniors and their families with the costs of home health, assisted living, or skilled nursing care, and the private resources can help seniors secure appropriate placement and pay for the costs of nursing home care. 

As the 2017 NAIC report stated, “Policyowners who sell their policies receive a lump sum payment that is generally four or more times greater than if they lapsed or surrendered their policy, according to government and university studies.”  According to the American Council of Life Insurers, in 2017, over 8 million individual life insurance policies, with an aggregate face value of over $450 billion, lapsed, for which policyholders received nothing.  Over 1.7 million additional individual policies, with an aggregate face value of over $100 billion, were transferred to the issuer for cash surrender value.  Seniors who elect those options often would fare better with life settlements. 

H.R. 7203 allows seniors and others to use life settlements to better plan for their long-term care and other health care needs.  “Life settlements make financial sense for seniors who are not going to keep their policies. This legislation helps seniors make the most effective use of valuable, but often overlooked, asset they already own – their life insurance policy – to fund their health care, rather than relying on loved ones or taxpayers," said Michael Freedman, Executive Director of the Alliance and CEO of LightHouse Life Solutions LLC.  “We strongly urge Congress to enact this important bill.”

4 Things You Should Know Before Deciding on Long-Term Care

By Chris Orestis

Today is a good time for those who haven’t yet reached retirement age to begin considering some key factors related to health scenarios they might face later in life.

“The bottom line is none of us knows ahead of time what our health will be in our 60s and beyond,” says Chris Orestis, Executive Vice President of GWG Life and author of the books Help on the Way and A Survival Guide to Aging. “Will you need long-term care? If so, to what degree, and how will you pay?”

Statistics suggest that long-term care could very well be in your future. Seventy percent of people over age 65 will require some type of LTC services during their lifetime, according to the U.S. Department of Health and Human Services.

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3 Ways The Tax Reform Bill Would Hit Seniors Hard In Health Costs

By Chris Orestis

The Senate’s passage of the Republican-sponsored tax reform bill, which could result in a $1.5 trillion tax cut, is seen by some as a Christmas present to most American taxpayers. Critics of the proposed legislation, however, suggest that the Grinch will have stolen Christmas from some seniors.

Older Americans have some important issues to consider in terms of how the bill could affect their health-care costs.

“For starters, the tax reform proposal would eliminate the tax deduction for medical expenses, and although a relatively small percentage of the population claim this deduction, it has the potential to galvanize a very powerful coalition of opposition to the largest tax reform proposal in a generation,” says Chris Orestis, Executive Vice President of GWG Life ( and author of the books Help on the Way and A Survival Guide to Aging.

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Advisor Magazine: A Conversation With Michael Freedman

By Carolyn S. Ellis

We talked with Michael Freedman, president of GWG, about how advisors and their clients can access this source of much-needed retirement funds.

LH&A: You’re in the business of helping seniors derive funds for retirement through the secondary life insurance market. Tell us about this opportunity.

MF: GWG Life is in the business of life settlements, which are the sale of a life insurance policy by a senior policyholder who no longer wants, needs, or can afford the policy. (We’re a subsidiary of GWG Holdings, a specialty finance company.)

As an alternative to lapsing or surrendering the policy he or she sells the policy for a market value which is on average 4-10 times more than cash surrender value. GWG is a buyer of policies licensed throughout the U.S. by state insurance departments. We’ve been in business for ten years, and we’re one of the most active buyers in the market.

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The Wall Street Journal: States Ease Use of Life Policies for Elder Care

By Kelly Greene

State lawmakers are encouraging elderly residents to use life insurance as a way to pay for long-term care—and lower the Medicaid tab in the process.

The strategy marks a tacit endorsement of so-called life settlements, a practice in which policyholders sell their policies at a discount in the secondary market and the buyer takes over premiums and consequently collects the death benefit.

Texas Gov. Rick Perry signed a law Friday that gives state Medicaid officials the authority to tell people applying for help they can sell long-held life-insurance policies to a third party to pay for custodial health care of their choice. Those who do so would remain eligible for Medicaid when those funds run out.

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Associated Press: Retirement planning should include long-term care costs

By Alexandra Olson

Many Americans have a blind spot when it comes to retirement planning: long-term care costs. Even though the majority of Americans will at some point need long-term care, few are planning for it. Many underestimate the costs and mistakenly believe health insurance can help cover it.

"This is not like being struck by lightning. It is something we will all face in our lives," said Bruce Chernof, president and CEO of the SCAN Foundation, which researches care for older adults. "If we don't need it ourselves, it is likely that our spouses, our significant other or our parents will. One way or another, it will touch the lives of every single American."

The U.S. government estimates that 70% of people aged 65 today will require some form of long-term care during their lives. Most of the time, that type of assistance is non-medical, including help with daily tasks such as bathing. The need can arise unexpectedly after a major illness or even suffering an injury from a fall.

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TIME: Dignity, Death and America's Crisis In Elder Care

By Haley Sweetland Edwards

By late 2014, Chabela Lawrence wasn’t doing well. She had mostly stopped cooking and cleaning for herself and began, every so often, to get lost on her way home from the neighborhood coffee shop–the one she’d been to a least a hundred times. The following March, the 74-year-old former catering manager was diagnosed with dementia, and it was clear she needed help. But it was then that she ran headlong into one of the most crushing failures of the U.S. health system: there’s no good way to pay for extended long-term care. Medicare doesn’t cover it. Private health plans don’t cover it. And for most, paying roughly $80,000 out of pocket, the average annual cost for a shared room at a skilled nursing facility, is simply out of the question.

Those in need of prolonged care face a dilemma. They have to be either poor enough to qualify for Medicaid or rich enough to shoulder the cost alone. Anyone who falls between those income extremes is out of luck. And that leaves many Americans vulnerable: 47% of men and 58% of women who are retirement age or older will experience a need for long-term care in the future, according to a February 2016 study by the Department of Health and Human Services. “It’s an insane situation,” Chabela’s daughter Ruby Lawrence says, recounting her mother’s experience. “You either have to be super-rich or super-poor to get benefits.”

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Is A “Failure To Plan” A Death Sentence?

By Chris Orestis

The costs of long term care are back on the rise, surging 4.5 percent this year alone to almost $100,000 a year for a private room, according to Genworth Financial. It’s a cost most families don’t contemplate until it is time to start paying for care and, by then, it can be too late.

The United States is facing a financial crisis driven by generations who have “failed to plan” for retirement and the long term care that 70 percent of those over 65 will need according to the Department of Health and Human Services. Families can quickly run through savings and investments trying to provide care for a loved one as they face a bewildering world of programs and choices among the public programs, the care options and the investing opportunities.

Without knowledge, professional guidance and a strategy, the most painful part of getting old isn’t the aging process—it’s figuring out how to pay for it. What follows is a guide to counseling families through the process of planning for long term care.

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GWG Life Finds the Solution to “Failure to Plan” In Your Clients’ Life Insurance Policies

By Chris Orestis

With a manageable mortgage, $1.3 million in investments and a pay-as-you go lifestyle, John and Mary had done everything right to set up their retirement to be the golden years that so
many aspire to. But, there was one bill they hadn’t factored into their planning, and it wasn’t even something they could have managed — John’s 82-year-old mother was about to outlive
the savings that she had been using to pay for her room in a nursing home in a small town in Minnesota.

For millions of Americans approaching retirement, this is just one of the stories of sticker shock about unanticipated health care and living costs in retirement. Fidelity’s Retiree Health Care Cost Estimate shows that for a couple retiring today, the average health care costs paid during retirement are estimated to be $260,000. And if that’s not enough of a shock, consider that is the average cost and doesn’t include responsibility for an aging parent. The total could be even higher if a retiree is forced to seek long-term care.

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NAIC Endorses Life Settlements to Cover Long-Term Care

By Donna Horowitz

After initially failing to pursue the idea of using life settlements to pay for long-term care last year, the National Association of Insurance Commissioners reversed course and now realizes the asset's potential to help solve the funding crisis for such care.

The NAIC's Long-Term Care Innovation (B) Subgroup adopted a policy Wednesday, July 19, outlining varous ways to pay for the care, including the use of life settlements.

"This document is intended to provide regulators, policymakers, consumers, and other stakeholders an overview of the landscape of long term care financing mechanisms currently available in the private market," the committee's five-page policy statement.

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USA Today: Senior health care crisis looms; report ranks states

By Michelle Healy

An aging nation that's living longer but with growing rates of obesity, diabetes and other chronic diseases points to an emerging health care crisis, says a report out Tuesday that analyzes seniors' health status state-by-state.

Just two years ago, the first Baby Boomers turned 65, setting into motion a "tremendous demographic shift in the U.S. population," said physician Rhonda Randall, a senior adviser to the not-for-profit United Health Foundation, which released America's Health Rankings Senior Report Tuesday.

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The Atlantic: Who Will Care for America's Seniors?

By Alana Semuels

Being a home-health aide is a lonely, difficult job, and the pay is miserable. But the country needs to find millions more people to do it.

My grandfather broke his hip at age 87. At the time, he lived with my grandmother in western Massachusetts in a beautiful house they’d built themselves abutting a farm. At 88, she was as “with it” as someone decades her junior, and she was determined to help him continue to live at home, where he could listen to classical music in his sunny study, or gaze at the sheep that sometimes grazed outside his window.

He went to a nursing home for short-term rehab right after the accident, and it was nightmarish, she told me. He was trapped in a room with patients who would be there for the rest of their lives, which depressed him. Nurses gave him his medication on an erratic schedule, not necessarily prioritizing his health. My grandmother decided he would do better at home.

It didn’t seem like it would be too hard. They’d added a downstairs bedroom and bathroom a few years back, so he wouldn’t have to go up stairs. And she was still mobile, and could cook for him and spend time with him and set reminders on her iPad for when it was time for him to take his medication. She had family and friends nearby, who could spell her from caretaker duties from time to time. Plus, they had paid tens of thousands of dollars for long-term care insurance, which would pay for a home-care aide to come and help them when needed.

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Afraid of a Hefty Long-Term Care Bill?

By Chris Orestis

Even as aging Americans revel in the splendor of their well-earned retirements, they still harbor plenty of worries, such as outliving their savings.

Near the top of the worry list is the fear their health will deteriorate so much they’ll be forced to seek long-term care, a situation that could leave them and their families slammed with expenses far beyond what they can afford.

Surprisingly enough, the solution to this particular problem may be right in their home, tucked away in a drawer.

“Many people don’t realize that a life insurance policy can be converted to pay for assisted living, home care and all other forms of long-term care,” says Chris Orestis, a senior-care advocate and author of the books “Help on the Way” and “A Survival Guide to Aging.”

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PBS: Why Long-Term Care for U.S. Seniors is Headed for ‘Crisis’

The roller coaster often starts in the middle of the night with a long-distance phone call. “Miss Bowser,” the caller begins tentatively. “It’s about your Mother.”

And that’s how my chaotic ride through the years of taking care of Mom got going. It ended 10 years later when she died at the age of 90.

Throughout this downward spiral of life, I had power of attorney, giving me responsibility for all major decisions about her medical care, her money and ultimately how she died.

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A long-term care plan for clients who have failed to plan

By Chris Orestis

Most people believe they will never need longterm care. Or if they do, they believe they’ll
be able to cover the expense. So what can be done if you did not plan for the possibility, and you or your loved one is confronted with an unexpected need
for long-term care?

Fortunately, solutions are available to help those who failed to plan. A fast-growing area of long-term care planning is “crisis management.”

Strategies are available for financial and legal advisors to help families pay for the costs of longterm care. Among them: settling life insurance policy death benefits into a structured vehicle that will pay for the costs of senior retirement living and long-term care.

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Senior Voice: Struggling to afford the next big health care crisis: Chronic and long-term care

By Alan Schlein

The next big health crisis is the battle over chronic care and long-term care. Patient advocates, policy experts and lawmakers call it the “silent crisis” – one that potentially will affect every American family: the inability to plan and pay for long-term care.

Some modest bipartisan cooperation to find a solution is emerging, despite it being a contentious election year. A bipartisan group of senators are trying to find actual solutions to the chronic care issues at the same time as think tanks and activists are floating long-term care solutions. Lawmakers in the House of Representatives held a hearing recently focusing on what could be done to help solve long-term care problems.

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Washington Post: I needed to find care for my elderly aunt. What I found was an eldercare crisis.

By A.K. Whitney

The call came right after lunchtime.

“I’ve fallen again.”

My great-aunt Emma sounded frustrated and frail. Her arm hurt too much to move, she said, let alone pick up the bag of groceries she’d just bought. It might be broken. Could I come pick her up and drive her to the emergency room?

I tried not to panic. This was her fourth fall of the year. How bad was this break? And how would this affect her long recovery from the lung injury she sustained during the first fall?

Emma is the kind of person I want to be when I finally grow up: sharp, indomitable, open to new experiences, independent. And always bandbox neat, often in a cute hat. However, as I waited for her in an emergency room cubicle to come back from X-rays, I realized I’d been in denial. It wasn’t that I hadn’t thought about losing her; as she went from her 80s to her 90s, I knew that was inevitable. But I hadn’t thought about what she might go through before that.

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Associated Press: Families face tough decisions as cost of elder care soars

By Matthew Craft

Doris Ranzman had followed the expert advice, planning ahead in case she wound up unable to care for herself one day. But when a nursing-home bill tops $14,000 a month, the best-laid plans get tossed aside.

Even with insurance and her Social Security check, Ranzman still had to come up with around $4,000 every month to cover her care in the Amsterdam Nursing Home in Manhattan. "An awful situation," said her daughter, Sharon Goldblum.

Like others faced with the stunning cost of elderly care in the U.S., Goldblum did the math and realized that her mother could easily outlive her savings. So she pulled her out of the home.

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LISA: Meet Two Experts Calling for a Revamp of the Life Settlement Market

By Warren S. Hersch

The life settlement market won’t realize its potential until two things happen: (1) commissions on the transactions are much reduced, if not eliminated; and (2) reporting of closing prices and transactions costs of life insurance policy sales are available to the public.

This is the view of Dr. Lauren Cohen, professor of finance at Harvard Business School; and Michael Freedman, president, GWG Life LLC., a life settlement investor and provider.

To learn more about the market’s promise and continuing challenges, LifeHealthPro Senior Editor Warren S. Hersch interviewed the two experts. The following are excerpts.

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Healthcare Finance: America has a long-term care crisis

By Jeffrey Lewis

Modern healthcare has changed the way we eat, exercise, and live. It consumes approximately 18 percent of our gross domestic product and continues to be one of the most divisive issues in politics, changing the electoral landscape from Arkansas to Alaska.

Unfortunately, when it comes to preparing for the health necessities of old age – ensuring healthy, affordable independence for seniors – we are failing.

America is swiftly approaching critical mass in our long-term home and healthcare sector. Almost 10,000 Americans are turning 65 everyday – more than doubling the number of retirees who will require long-term care by 2050. Even more startling, roughly 70 percent of America’s seniors will need some type of long-term care. That’s why today, more than 45 million Americans are caring for an elderly family member.

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