LTC Bullet--Great New LTC Financing Approach by Any Name

Tuesday, January 7, 2003


LTC Comment: "Fannie Mae" objected litigiously to the name "Grannie Mae," so to avoid lawsuits and launch soonest, this creative new long-term care financing concept/company has become "ElderLife Financial." Read more about it after the ***news***.

*** SPECIAL ALERT: LTCI BENEFITS EXCEED $1BILLION IN ONE YEAR: "For the first time, over $1 billion worth of annual benefits have been paid to Americans who possess long-term care insurance protection according to the just-published edition of Long-Term Care Insurance Strategies magazine. 'This is a very significant industry milestone considering long-term care insurance is still a relatively new business and a considerable number of years generally pass between the time someone buys coverage and when they go on claim,' states Jesse Slome, editor-in-chief of the quarterly industry publication. 'For the 12-months ending December 31st, the nation's LTC insurers will have paid out a cumulative sum of $1 billion to tens of thousands of Americans receiving insurance benefits to pay for the cost of home and facility care.'

"The findings contained in the year-end issue of Strategies are part of an overall focus on the subject of LTCi claims. Conseco Senior Health and GE Financial are the nation's two largest payers of LTCi claims benefits with over 27,000 open claims according to the special issue. 'When an ice storm or hurricane strikes, the news media covers the loss and often reports positively about insurance benefits paid to claimants,' Slome notes. 'The long-term care industry can capitalize on this important milestone to demonstrate to consumers and legislators the growing and significant role played by insurance protection.' Information on Sales Strategies magazine can be found at or by calling (888) 599-5997. A yearly subscription to the publication costs $24. A single copy of the issue dealing with Claims can be obtained for $10." [The issue with this story is LTCi Sales Strategies Magazine, Volume 4, Number 4, December 2002.]

Source: INSURANCE-LETTER for Tuesday, January 2, 2003. To subscribe send an e-mail to with the word "subscribe", or call 888.282.1765. ***

*** Donor-zone contributors to the Center for Long-Term Care Financing have a new benefit starting with the New Year. All donor-zone content, including LTC E-Alerts, LTC Readers and the LTC Data Base, will be emailed directly to qualified contributors ($150 per year or more). We will continue to archive all donor-zone content in the Zone at , but donors will only need to enter their user names and passwords to access past issues on the site. Current material will appear daily in their electronic in-baskets. (If you are a qualified contributor but are not receiving this material, contact .)

Our goal with The Zone is to provide one-a-day mental vitamins aimed primarily at LTC insurance producers to help them stay abreast of news, data and analysis related to all aspects of long-term care service delivery, financing and research. Spend only five minutes per day to stay at the forefront of industry knowledge and professional competency.

Latest donor-only zone content includes:

LTC E-Alert #3-001--Special Message for CLTCF Donor-Zoners
LTC E-Alert #3-002--Medicaid Mess Means Greater Need for LTCI

The LTC Reader #3-001--Social Security and Medicare Trust Funds Worse Off than They Seem

If you already qualify for The Zone, you can click the following link, enter your user name and password, and go directly to the latest donor zone content: .

To Zone In, mail your tax-deductible contribution of $150 or more to the Center for Long-Term Care Financing, 2212 Queen Anne Avenue North, #110, Seattle, WA 98109. Then email your preferred user name and password (up to 10 characters each). You can also contribute online by credit card or direct withdrawal at . ***

*** We recently lamented (in an LTC Bullet on December 17, 2002) the absence of a celebrity spokesperson for long-term care. Hawaii's Long-Term Care Ombudsman John McDermott quickly replied with the following recommendation: "I suggest you get one of 'The Golden Girls' to be the LTC insurance celebrity spokesperson. [The program] is still very popular AND the only show about seniors doing whatever was necessary to support one another and pool their resources so they could stay in their own homes instead of the dreaded nursing home (Shady Pines) [that] Dorothy was always threatening to put Ma back into. Estelle Getty [Sophia Petrillo] is no longer alive but Betty White [Rose Nylund], Rue [McClanahan, Blanche Devereaux] and Bea Arthur [Dorothy Zbornak] are still around. Betty's cause [is] abandoned animals. I think Rue is the same but Bea has no cause yet. Sorry but I have no Hollywood connections." Any Bullets readers out there with Hollywood connections? To track down the "Golden Girls," try ***

*** Time is running short to register for The Third Annual Intercompany LTCI Conference (January 26-29, 2003) in Las Vegas, Nevada. For details and to register, go to . Highlights: six education tracks offering 47 interactive sessions; network with your peers and LTCI experts; expert speakers from the LTCI industry; two new sub-tracks: Group LTCI and LTCI 101 - The Basics; current, practical and informative discussion opportunities; three national LTC designation programs on Saturday and Sunday before the Conference. Center for Long-Term Care Financing President Steve Moses says "I hope to see you there." ***


Notice: The following information refers to "Grannie Mae." Please note that the name Grannie Mae has been changed to "ElderLife Financial." For further information, readers should consult because will soon become inactive. We published this material earlier as an LTC E-Alert in the Center's donor-only zone. We present it now as an LTC Bullet to help get the word out about this name change.

LTC Comment: "Grannie Mae," as described in the following excerpts from an article on the subject, is a great idea for financing long-term care. Unfortunately, it will run into some of the same obstacles that have impeded the development of private long-term care insurance and home equity conversion products. People can obtain Medicaid nursing home benefits if they lack enough cash flow to pay privately for care while preserving substantial assets through the program's home, business, and other unlimited exemptions. Without their assets genuinely at risk, few people plan early to insure for long-term care. Even after a long-term care crisis begins, they are reluctant to tap the equity in their homes to pay for long-term care when Medicaid exempts the home and all contiguous property regardless of value. The only reason why LTC insurance and home equity conversion are finally starting to get some traction in the marketplace is that consumers no longer find Medicaid-financed nursing home care to be desirable or adequate. Medicaid has such a bad reputation and nursing homes dependent on Medicaid have such poor reputations for access and quality that people are actually starting to spend their own money to get home care and assisted living in the private marketplace. That's why Grannie Mae has a chance. But rational public policy that targets Medicaid to the truly needy and encourages private financing alternatives like LTC insurance, home equity conversion and Grannie Mae, could grease the skids and facilitate a much quicker solution to the long-term care financing crisis.

The following excerpts are from Stephen Monroe, "Financing Help is Here," The Seniorcare Investor, Volume 14, Issue 11, November 2002.

"First disclosed in our June 2001 issue, Grannie Mae is about to make its grand entrance onto the elder care financing scene, but we are not talking about facility mortgage financing, which is more the domain of a Fannie Mae or HUD. Grannie Mae's raison d' etre is to help solve the affordability crisis for our senior citizens, and their families, when it comes to paying for an extended length of stay in a senior care facility. Even though many of the elderly own their own homes, the reverse mortgage concept to finance their stay in a long-term care facility never took off for a variety of reasons, and although the incidence of spend-down is not nearly as high as the general media would like consumers to believe, the perception of spend-down remains quite prevalent. Until now, there have been few financing alternatives for families.

"Founded by Elias Papasavvas, Washington, D.C.-based Grannie Mae would like to change how Americans view the financing decision for living in senior care facilities. In fact, the concept was so appealing to one provider it appeared as if they might try to borrow the idea, but may have had second thoughts upon understanding the complexity of executing a national funding program. The financing program Mr. Papasavvas has developed is rather simple, leaving one to question why no one had this idea several years ago. Basically, Grannie Mae has arranged with a regional mid-Atlantic bank to provide up to $50,000 in unsecured financing per family to help pay for a parent's stay in an assisted or independent living community (skilled nursing will be added later). Up to four children can be co-signers on the loan, and the approval process is expected to take between 15 minutes and two hours, literally while the family is filling in the paperwork for admission into a facility. The program will work much like a home equity line of credit, except there will be no collateral other then the personal guarantees of the participating children. Initially, monthly payments will be wired directly from the bank to the facility, and then as the program gains momentum, the family members will receive checks that can be used each month (payable only to the facility). In today's market, the interest rate would be between 9% and 10%, depending on the applicants' credit history, and the monthly payment is expected to be the greater of 2% of the outstanding balance or $200. This seems to be a reasonable amount for most children to be able to afford, especially knowing that much of their parent's estate will be preserved. . . .

"There has been one recent bump in the road, however. It seems that Fannie Mae has taken exception to the use of the Grannie Mae name, despite the fact that the Patent & Trademark Office indicated that the Grannie Mae name appeared to be entitled to registration. While both Fannie and Grannie have reasonable arguments regarding the use of the name, Grannie's greater interest is in rolling out this needed product today. Despite being in very different markets, Fannie Mae has apparently thrown its litigious fanny around, and Grannie Mae may be looking for a new name. Although that is a disappointment, it does not change the attractiveness of the concept, to consumers as well as to providers, many of which have been very supportive of the program.

"The official launch is expected to be in December, mostly in Virginia and Maryland with a foot in the water in New Jersey and Pennsylvania, and once the kinks are worked out, the program will be expanded to more states. It should grow very quickly and the services offered are expected to expand over time as well, helping to finance home health care and perhaps hospice care. As long as default rates can be kept low, Grannie Mae should be a huge success regardless of what it is eventually called. More information can be obtained at"