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Savvy Senior

Savvy Senior

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Savvy Senior – April Columns

1.    How Reverse Mortgages Work in 2014

2.    Air Travel Tips for Seniors with Special Needs

3.    How to Get Help with Medicare Decisions

 

Savvy Senior

How Reverse Mortgages Work in 2014

Dear Savvy Senior,

What can you tell me about reverse mortgages? I was considering one last year, but now I hear they are more difficult to get.

Ready to Reverse

 

Dear Ready,

That’s correct. Tighter rules on reverse mortgages that have recently gone into affect have made them harder to get, especially for seniors with heavy debt problems.

The reason the Federal Housing Administration (FHA) made these changes was to strengthen the product, which has suffered from a struggling housing market and a growing number of defaults by borrowers. Here’s a rundown of how reverse mortgages now work in 2014.

Overview: The basics are still the same. A reverse mortgage is a loan that allows senior homeowners to borrow money against the equity in their house. The loan doesn’t have to be repaid until the homeowner dies, sells the house or moves out for at least 12 months. It’s also important to know that with a reverse mortgage, you, not the bank, own the house, so you’re still responsible for property taxes, insurance and repairs.

Eligibility: To be eligible for a reverse mortgage you must be at least 62 years old, own your own home (or owe only a small balance) and currently be living there. You will also need to undergo a financial assessment to determine whether you can afford to make all the necessary tax and insurance payments over the projected life of the loan.

Lenders will look at your sources of income, assets and credit history. Depending on your financial situation, you may be required to put part of your loan into an escrow account to pay future bills.

If the financial assessment finds that you cannot pay your insurance and taxes and have enough cash left to live on, you will be denied.

Loans: Nearly all reverse mortgages offered today are Home Equity Conversion Mortgages (HECM), which are FHA insured and offered through private mortgage lenders and banks. HECM’s also have home value limits that vary by county, but cannot exceed $625,500.  See hud.gov/ll/code/llslcrit.cfm for a list of HUD approved lenders.

Loan amounts: The amount you get through a reverse mortgage depends on your age, your home’s value and the prevailing interest rates. Generally, the older you are, the more your house is worth, and the lower the interest rates are, the more you can borrow. A 70-year-old, for example, with a home worth $300,000 could borrow around $170,000 with a fixed-rate HECM. To calculate how much you can borrow, visit reversemortgage.org.

Loan costs: Reverse mortgages have a number of up-front fees including a 2 percent lender origination fee for the first $200,000 of the home’s value and 1 percent of the remaining value, with a cap of $6,000; a 0.5 percent initial mortgage insurance premium fee; along with an appraisal fee, closing costs and other miscellaneous expenses. Most fees can be deducted for the loan amount to reduce your out-of-pocket cost at closing.

In addition, you’ll also have to pay an annual mortgage insurance premium of 1.25 percent of the loan amount.  

Payment options: You can receive the money in a lump sum, a line of credit, regular monthly checks or a combination of these. But in most cases, you cannot withdraw more than 60 percent of the loan during the first year. If you do, you’ll pay a 2.5 percent upfront insurance premium fee.

Counseling: All borrowers are required to get face-to-face or telephone counseling through a HUD approved independent counseling agency before taking out a reverse mortgage. Some agencies are awarded grants that enable them to offer counseling for free, but most charge around $125 to $250. To locate a counseling agency near you, visit hud.gov/offices/hsg/sfh/hecm/hecmhome.cfm or call 800-569-4287.

Send your senior questions to: Savvy Senior, P.O. Box 5443, Norman, OK 73070, or visit SavvySenior.org. Jim Miller is a contributor to the NBC Today show and author of “The Savvy Senior” book.

Savvy Senior

Air Travel Tips for Seniors with Special Needs

Dear Savvy Senior,

I would like to fly my elderly parents across the country next month for my daughter’s wedding but have some concerns about the flight. My mom has trouble walking long distances and my dad has COPD and needs an oxygen tank. What airport or airline services are available to help old passengers?

Concerned Daughter

 

Dear Concerned,

Flying can be physically exhausting for anyone, but for seniors with health issues or physical limitations it can be extremely challenging. Here are a few tips that can help.                                                                                         

Booking the Flight

When you go to book your parent’s flight, this is the time to make special requests that can help make the trip easier for them. You’ll need to make these requests over the phone.

For example, you may want to inquire about seats in the front of the plane for easier access or bulkhead seats that provides extra leg room, and you should probably request a wheelchair or two with attendant(s) to maneuver your parents through the airports they will be departing from and arriving to, and if there’s a connecting flight in between.

If your parents don’t want a wheelchair, but want some help, ask about electric carts.

You also need to check with the airline regarding their policy for portable oxygen concentrators for your dad. Some airlines require specific medical forms that will need to be signed by his doctor.

Airport Assistance

If your parents are flying on their own, you should know that airlines allow elderly fliers to be escorted to and from the gate by a non-traveling companion, as long as the escort provides his or her full name, birth date and government-issued ID.

If no one is available to help your parents, find out how the airline can assist them. Delta Airlines, for example, can have an employee help your parents through check-in with 48 hours notice, and American Airlines provides special assistance to passengers with disabilities.

Or, consider hiring an independent company like Royal Airport Concierge Services (isroyalusa.com), who will meet your parents at the curb to help them check their bags and escort them to security. They typically charge $150 to $250 and serve dozens of airports across the U.S.

There are also a number of traveling companion services like FlyingCompanions.com and PreferredTravelHelpers.com that will do everything, including making the travel arrangements, accompanying your parents on the trip, and facilitating their needs along the way. Fees vary, depending on what’s needed and travel costs.

Going Through Security

All U.S. airports offer expedited screening to passengers 75 and older that allows them to move through security without removing their shoes or jacket, and many airports have lanes specifically for use by passengers with disabilities and medical conditions so they don’t have to wait in line. They should ask about these when they check-in.

If your parents are packing medications in a carry-on bag, they should know that their pills and/or liquid medications do not have to be packed in their prescription containers to get through airport security, but they will need to separate them from their other belongings so they can be screened. Liquid medications in excess of 3.4 ounces will require separate screening.

For more information on other airport security screening policies and procedures visit tsa.gov/traveler-information, or call TSA Cares at 855-787-2227 where you can ask specific questions.

Boarding and Deboarding

When it’s time to board, your parents can take advantage of the airlines pre-boarding option for elderly passengers who need some extra time to get on the plane and get settled. And for getting off the plane, they can wait for the other passengers to debark so attendants can assist them with carry-ons and escort them from the plane.

Send your senior questions to: Savvy Senior, P.O. Box 5443, Norman, OK 73070, or visit SavvySenior.org. Jim Miller is a contributor to the NBC Today show and author of “The Savvy Senior” book.

Savvy Senior

How to Get Help with Medicare Decisions

Dear Savvy Senior,

Where can I get help with my Medicare decisions? I’m approaching 65, and could use some help sorting through the different Medicare plan options that are available to me.

Almost Eligible

 

Dear Almost,

The options and choices available to Medicare beneficiaries today can be overwhelming. In addition to original Medicare (Part A and B) that has been around for 49 years, you also have the option of enrolling in a Part D prescription drug plan, and a supplemental (Medigap) policy – both of which are sold by private insurance companies. Or, a Medicare Advantage plan which covers health care, prescription drugs and extra services all in one. These plans, which are also sold by private insurers, are generally available through HMOs and PPOs.                                                                                              

To help you figure out the Medicare plans for you, there are a variety of services and tools available today depending on how much help you need. Here are several to get you started.   

Free Resources

A good starting point to get familiar with Medicare is the “Medicare & You” 2014 handbook that overviews the program and your options. You can read it online at medicare.gov/pubs/pdf/10050.pdf, or you should receive a free copy in the mail one month before your 65th birthday.  

The Medicare website also offers a free “Plan Finder” tool at medicare.gov/find-a-plan that can help you find and compare health plans, supplemental policies and prescription drug plans in your area. Or, if you don’t have Internet access, or don’t feel confident in working through the information on your own, you can also call Medicare at 800-633-4227 and a customer service representative will do the work for you over the phone.

Other free resources that can help include planprescriber.com or ehealthmedicare.com, two websites developed by eHealth Insurance that will compare Part D, Advantage and supplemental plans in your area and connect you to a licensed insurance agent.

In addition, the Medicare Rights Center (medicarerights.org) staffs a hotline at 800-333-4114 to help answer your Medicare questions.

And your State Health Insurance Assistance Program (SHIP) provides free Medicare counseling in person or over the phone. To find a local SHIP counselor see shiptalk.org, or call the Eldercare Locator at 800-677-1116.

And, for tips on choosing a top Medicare Advantage plan, see the HealthMetrix Research Cost Share Report at medicarenewswatch.com. This resource lists the best Advantage plans by area based on your health status.

Fee-Based Services

If the free services don’t cut the mustard and you need some additional help in making your Medicare decisions, there are a handful of fee-based companies that are very helpful.

One of the best is Allsup Inc. (ama.allsup.com, 866-521-7655) which offers a Medicare Advisor service that takes your personal information online or over the phone, such as the prescription drugs you take and the doctors you use, and provides you customized advice on the best Medicare plans that match your needs and budget. They’ll even help you enroll in the plan(s) you select. Fees for their services range between $200 and $495 depending on how much help you need.

Another option is Healthcare Navigation (healthcarenavigation.com, 877-811-8211), which charges $750 for a 90-minute comprehensive Medicare consultation.

Commission-Based

Another way to get help with your Medicare enrollment is to consult an independent insurance agent. Agents typically get paid a commission to sell you a policy, although they offer plans from a number of providers.

The Independent Insurance Agents and Brokers of America have a directory on their website (see independentagent.com/contactus) that lets you search for agents in your area. But keep in mind that agents typically specialize in the Medicare plans they represent, rather than all the plans in your market.

 

Send your senior questions to: Savvy Senior, P.O. Box 5443, Norman, OK 73070, or visit SavvySenior.org. Jim Miller is a contributor to the NBC Today show and author of “The Savvy Senior” book.

 

 

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