Do Prescription Discount Cards Actually Save You Money?

Do Prescription Discount Cards Actually Save You Money?

 

 

 

 

Imagine if your grocery store acted like a pharmacy. Milk can only be found behind a counter, and you have no idea how much it costs until checkout. At checkout, you find that this particular brand of milk is $105, which has no relationship to the quality of the milk, but you can’t really price check it against the other brands. The weirdest part? There’s another company you’ve probably never heard of that can get you the milk for $5, but who they are and what they do is a mystery.

 

A drug discount card will show you how much you’ll pay for your prescription, and whether switching pharmacies or using a specific discount or savings tip will help you save money.

 

 

How Prescription Prices & Discounts Work

 

 

When you go to a pharmacy in America to pick up a prescription, you’ll pay one of the following:

 

1) A “cash price.” Think of a cash price like a car’s sticker price—this is what you pay if you don’t have insurance or if your insurance company won’t cover that drug (it’s not on their “formulary,” which happens more often than you’d think).

 

2) A “club price.” A discounted price that you get if you join that pharmacy’s club (sometimes free, sometimes requiring a paid membership). No insurance is required—you just have to join the club.

 

3) A “negotiated (or coupon) price.” A discounted price based on a contract between the pharmacy and an insurance company (technically, it’s called a Pharmacy Benefit Manager). If you have insurance, your co-pay is generally a percentage of that price or a flat fee ($10, etc).

 

The cash prices at pharmacies are usually very high, but if you know where to look, there are great discounts that can be found. Some pharmacies (usually grocery stores or big-box stores) offer very cheap cash prices for certain generic drugs. Many pharmacies publish a list of popular generic drugs with cheap cash prices. Some pharmacies even offer certain drugs for free! The problem is knowing which drugs are on which pharmacies’ lists—it’s somewhat random and drugs are added and removed frequently.

 

Club prices can be lower than cash prices, and pharmacies don’t always tell you when a lower club price is available. Keep in mind that club prices a) may require a membership fee and b) require you to provide some personal information to the club.

 

Negotiated prices are probably the most confusing part of what a drug discount organization does, but they’re also a great, easy way for you to save on your prescriptions.

 

Virtually all pharmacies enter into contracts with companies called Pharmacy Benefit Managers (PBMs) to provide discounted prices for the hundreds of millions of Americans who have insurance. These same contracts also allow people not using insurance to receive a smaller discount when they use a free discount coupon or card. It’s worth noting that some pharmacies will not honor coupons for controlled substances ( Adderall, oxycodone, etc.).

 

Most reputable drug discount organizations also provides savings tips, suggestions for alternative less-expensive drugs, information on manufacturer coupons, drug shortage and recall info, pill identification tools and much more. The goal is to make you an informed consumer by providing as much information as possible in an organized, easy-to-read way.

 

 

Will a Prescription Drug Discount Card Save You Money?

 

You can decide whether a discount drug card will be helpful to you by getting answers to the following questions:

  • How much does it cost you to obtain the card? Some are free, but not all of them are. What are the fees, or what is the purchase price? If there are fees, are they one-time only? Or do they recur?
  • Is the card honored at your pharmacy? If the card is not honored at your pharmacy of choice, are you willing to change pharmacies to be able to use their discount? If the drugs you need are available only through a mail-order pharmacy, do you have to pay additional shipping and handling costs?
  • Does the card cover the drugs you take? Not every card will help pay for every drug. The more common the drug you take, the better chance you can get a discount. Some cards cover generic drugs and some do not.

 

 

 

Once you know the drug is covered, and that you can obtain the drugs through a pharmacy that is acceptable to you, you’ll want to check the price of the drug using the card.

 

Then you’ll want to ask:

 

  • Have I compared the cost of my drug through my pharmacy with other pharmacies in my area, too?
  • Can I get a lower price using this drug card than any other price I have found, even when I take into account the cost of obtaining the card, or shipping costs (if applicable)?

 

Once you have made the assessment for each card you are eligible for, you’ll be able to determine your best option for saving money.

 

Recommended Prescription Discount Company (Free)

 

 

 

I recommend SearchRx

SearchRx is free, and accepted at 68,196 pharmacies, including Rite Aid, Walmart, Walgreens, CVS, Target, and many others.

 

 

 

 

How to Use SearchRx

 

Search the SearchRx database and pharmacy price checker for the lowest discounted prices on over 50,000 prescription drugs. Their relationship with a leading pharmacy benefit manager gives SearchRx access to the best discounted prescription prices, which are passed on to you for excellent savings.

 

 

The price of prescription medications can vary greatly – even between pharmacies in the same chain.

SearchRx gives you access to their pricing, so you can find and compare the best pharmacy prices near you.

SearchRx works with nearly every pharmacy in America, so you’ll always know you’re getting the best deal in your area.

 

 

 

Once you’ve found your best local pharmacy price, saving is easy. Simply print out, email, or receive your prescription coupon by text message, then present this coupon to your pharmacist when you check out. The codes on your drug coupon will be entered by the pharmacist to access SearchRx group rate prices.

 

 

It’s a very simple process:   Bring your discount coupon with your prescription ​to the pharmacy of your choice and save on all FDA-approved prescription medications.

These discounts are available to all U.S. residents, no exceptions.

 

There are no deductibles.  Regardless of your insurance status, (whether insured, underinsured or uninsured) you will never be charged for the use of your searchRx drug coupons.

 

There are no limitations or maximums.  Use your searchRx discount coupon once, or a million times. There is no limit to your savings.

 

There are no pre-existing condition exclusions.  There is no coverage refusal based on any pre-existing medical conditions. searchRx coupons are available for use for all Americans.

 

SearchRx is free.  There are no hidden fees, or any fees for that matter. You will absolutely NEVER be charged for using the SearchRx service or affiliated coupons. 

 

 

Use SearchRx even if you already have insurance: The SearchRx card is not insurance; they simply provide discounts on prescriptions.

When you go to the pharmacy to pick up your prescription, just bring both your insurance card and the SearchRx coupon with you, and ask the pharmacist to see which provides the more cost-effective option for you. 

 

 

Here is a video demonstrating how SearchRx works:

 

 

 

 

 

 

Thoughts, questions, tips?  Feel free to comment below.

 

 

 

 

 

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Caregiver’s Guide to Assisting With Open Enrollment

Caregiver’s Guide to Assisting With Open Enrollment

 

 

 

It’s that time of year! From October 15 until December 7, Medicare beneficiaries will be able to change their choices for Part D (prescription drug) coverage, enroll in or change a Medicare Advantage plan, and (in certain circumstances) possibly change Medigap plans.

 

 

 

 

Just writing that sentence can give one a knot in the stomach. Too many choices, not enough information. Where should you begin?

 

 

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The Medicare Open Enrollment Period is an annual period of time (October 15 through December 7) when current Medicare users can choose to re-evaluate part of their Medicare coverage (their Medicare Advantage and/or Part D plan) and compare it against all the other plans on the market. After re-evaluating, if you find a plan that is a better fit for your needs, you can then switch to, drop or add a Medicare Advantage or Part D plan. Medicare Advantage is also known as a “Part C” plan.

 

 

Medicare Advantage plans are private health plans that have contracts with Medicare. When you join one, you get your Medicare-covered healthcare services through the private plan.

 

 

 

 

If you join a Medicare Advantage Plan, you still have Medicare. You’ll get your Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) coverage from the Medicare Advantage Plan and not Original Medicare.

Medicare Advantage Plans must cover all of the services that Original Medicare covers except hospice care. Original Medicare covers hospice care even if you’re in a Medicare Advantage Plan. In all types of Medicare Advantage Plans, you’re always covered for emergency and urgently needed care.

 

The plan can choose not to cover the costs of services that aren’t medically necessary under Medicare. If you’re not sure whether a service is covered, check with your provider before you get the service.

Medicare Advantage Plans may offer extra coverage, like vision, hearing, dental, and/or health and wellness programs. Most include Medicare prescription drug coverage (Part D). In addition to your Part B premium, you usually pay a monthly premium for the Medicare Advantage Plan.

 

First, your care recipient should have received an annual notice from the companies that are supplying their coverage. Some of the packages look overwhelming and one just longs to discard them. But wait. At least take out the thinner booklet–the Annual Notice of Change (ANOC)–and look at the first few pages.

 

Is the plan premium going up? If so, is it going up a LOT? If the increase is 10% or higher, that indicates that there may be a better alternative out there.

 

What about the deductible? If it used to be zero, and now it’s not, that’s another indication that you may want to think about changes. The more difficult information to assess is changes in the drug premiums.

 

When you opened your packet, you saw the company had added another “tier” to the generic drugs. Your care recipient takes generic drugs. How will this affect them?

 

 

 

Is your loved one in a Part C/Medicare Advantage/ Managed Care plan? Do you have any idea what you paid out in copays this year? Were there unexpected expenses that the plan did NOT pay? Are they likely to recur? You may want to consider changing to a Medigap plan with fixed costs.

 

Conversely, are you paying for a Medigap plan, but your loved one has few, if any, physician visits, except annual wellness checks and preventive benefits? If your relative lives in the same area year-round, you may want to investigate Medicare Advantage plans with lower premiums and possible additional benefits like hearing and vision assistance.

It is wise to assess these things each and every year. But if you haven’t reassessed in at least three years, you need to think about having a “checkup.” A number of options exist:

 

  • Access free professional advice about Open Enrollment from a licensed benefits advisor.

 

  • Find a State Health Assistance Insurance Program (SHIP) counselor in your region. SHIP provides free, federally funded one-on-one Medicare counseling. You can visit the SHIP website or call their toll-free number at 1-877-839-2675. However, be forewarned—it is often difficult to access this program during the Open Enrollment period. This is a particularly busy time of year for SHIP so be patient with the office and be sure to call as early as October 1 for an appointment. You can also call your local “Area Agency on Aging” and ask if they are hosting any public information sessions about Open Enrollment that you can attend. This will provide you with a helpful intro to the topic, and you may even be able to ask questions publicly and privately.

 

 

SHIP volunteers and staff provide free, objective information and assistance to people with Medicare and their families, by telephone and sometimes in face-to-face sessions. If you are likely eligible for extra assistance such as Medicare Savings Programs or Medicare Part D Extra Help, the SHIP is often particularly helpful because they may be able to help you apply for these extra benefits.

 

Your SHIP can help you:

 

  • decide when and how to get your Medicare coverage
  • compare various options for receiving your Medicare benefits
  • review situations involving both Medicare and your state’s Medicaid program
  • decide if you need additional coverage or different coverage
  • determine if you already have other health benefits in addition to or instead of Medicare
  • compare various ways for you to supplement your Medicare benefits and, in some states, help you compare benefits and costs of specific plans

 

You can also call  1-800-MEDICARE (1-800-633-4227), the Medicare program’s toll-free number. You may have to wait. Try to call during “off hours.” Once you get an advisor, make sure that they tell you what your loved one’s “saved drug ID” and “password date” are so that you can use this information to do your own research on whether their drug formulary has changed.

 

*In most cases, you won’t have a right under Federal law to switch Medigap policies unless you’re eligible under a specific circumstance or guaranteed issue rights or you’re within your 6-month Medigap Open Enrollment period.

By law, when you buy a Medigap policy, you have a 30-day “free look” or trial period. If you change your mind within 30 days of the day your policy started, you can cancel it and get a refund.

If you are switching Medigap plans, do not cancel your first policy until after your free look period is up. You may have to pay two premiums for 1 month. But you will be able to change back to your first plan if you need to.

Your state may, however, have expanded these rights.  Consult your state health insurance department to learn the rules in your area.

 

 

 

 

Recommended: Medicare for Dummies, 2nd Edition

In plain language, the new edition explains:

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FBI Warning: Seniors Getting Scammed!

Seniors Are Getting Scammed

Older adults get scammed out of $36 billion each year. Even worse, most of this money can never be recovered. Fraudsters are stealing hard-earned savings and ruining seniors’ lives.

 

Being aware of popular senior scams helps you protect your older adult from losing money to these thieves. Here, I’ve summarized advice from the FBI about common senior scams and tips to protect against them.

 

Talk with your older adult about these scams and let them know about the warning signs. It’s better to be safe than sorry – emphasize that they’re not being rude for refusing to speak with a potential scammer. Since stolen money isn’t likely to be recovered, the key is to shut down the scams before they can do any damage.

 

Senior Citizens especially should be aware of fraud schemes for the following reasons:

 

  • Senior citizens are most likely to have a “nest egg,” to own their home, and/or to have excellent credit—all of which make them attractive to con artists.

 

  • People who grew up in the 1930s, 1940s, and 1950s were generally raised to be polite and trusting. Con artists exploit these traits, knowing that it is difficult or impossible for these individuals to say “no” or just hang up the telephone.

 

  • Older Americans are less likely to report a fraud because they don’t know who to report it to, are too ashamed at having been scammed, or don’t know they have been scammed. Elderly victims may not report crimes, for example, because they are concerned that relatives may think the victims no longer have the mental capacity to take care of their own financial affairs.

 

  • When an elderly victim does report the crime, they often make poor witnesses. Con artists know the effects of age on memory, and they are counting on elderly victims not being able to supply enough detailed information to investigators. In addition, the victims’ realization that they have been swindled may take weeks—or more likely, months—after contact with the fraudster. This extended time frame makes it even more difficult to remember details from the events.

 

  • Senior citizens are more interested in and susceptible to products promising increased cognitive function, virility, physical conditioning, anti-cancer properties, and so on. In a country where new cures and vaccinations for old diseases have given every American hope for a long and fruitful life, it is not so unbelievable that the con artists’ products can do what they claim.

 

 

What to Look For and How to Protect Yourself and Your Family

 

Health Care Fraud or Health Insurance Fraud

 

Medical Equipment Fraud:

In this fraud, equipment manufacturers offer “free” products to individuals. Insurers are then charged for products that were not needed and/or may not have been delivered.

 

“Rolling Lab” Schemes:

Unnecessary and sometimes fake tests are given to individuals at health clubs, retirement homes, or shopping malls and billed to insurance companies or Medicare.

 

Services Not Performed:

Customers or providers bill insurers for services never rendered by changing bills or submitting fake ones.

 

 

Medicare Fraud:

Medicare fraud can take the form of any of the health insurance frauds described above. Senior citizens are frequent targets of Medicare schemes, especially by medical equipment manufacturers who offer seniors free medical products in exchange for their Medicare numbers.

Because a physician has to sign a form certifying that equipment or testing is needed before Medicare pays for it, con artists fake signatures or bribe corrupt doctors to sign the forms. Once a signature is in place, the manufacturers bill Medicare for merchandise or service that was not needed or not ordered.

 

Tips for Avoiding Health Care Fraud or Health Insurance Fraud:

 

 

  • Never sign blank insurance claim forms.

 

  • Never give blanket authorization to a medical provider to bill for services rendered.

 

  • Ask your medical providers what they will charge and what you will be expected to pay out-of-pocket.

 

  • Carefully review your insurer’s explanation of the benefits statement. Call your insurer and provider if you have questions.

 

  • Do not do business with door-to-door or telephone salespeople who tell you that medical services or equipment are free.

 

  • Give your insurance/Medicare identification only to those who have provided you with medical services.

 

  • Keep accurate records of all health care appointments.

 

  • Know if your physician ordered equipment for you.

 

Counterfeit Prescription Drugs

 

Tips for Avoiding Counterfeit Prescription Drugs:

 

  • Be mindful of appearance—closely examine the packaging and lot numbers of prescription drugs and be alert to any changes from one prescription to the next.

 

 

  • Consult your pharmacist or physician if your prescription drug looks suspicious.

 

  • Alert your pharmacist and physician immediately if your medication causes adverse side effects or if your condition does not improve.

 

  • Use caution when purchasing drugs on the Internet. Do not purchase medications from unlicensed online distributors or those who sell medications without a prescription. Reputable online pharmacies will have a seal of approval called the Verified Internet Pharmacy Practice Site (VIPPS), provided by the Association of Boards of Pharmacy in the United States.

 

  • Be aware that product promotions or cost reductions and other “special deals” may be associated with counterfeit product promotion.

 

 

Funeral and Cemetery Fraud

 

 

Tips for Avoiding Funeral and Cemetery Fraud:

 

  • Be an informed consumer. Take time to call and shop around before making a purchase. Take a friend with you who may offer some perspective to help make difficult decisions. Funeral homes are required to provide detailed general price lists over the telephone or in writing.

 

  • Educate yourself fully about caskets before you buy one, and understand that caskets are not required for direct cremations.

 

  • Understand the difference between funeral home basic fees for professional services and any fees for additional services.

 

  • Know that embalming rules are governed by state law and that embalming is not legally required for direct cremations.

 

  • Carefully read all contracts and purchasing agreements before signing, and make certain that all of your requirements have been put in writing.

 

  • Make sure you understand all contract cancellation and refund terms, as well as your portability options for transferring your contract to other funeral homes.

 

  • Before you consider prepaying, make sure you are well informed. When you do make a plan for yourself, share your specific wishes with those close to you.

 

  • As a general rule governing all of your interactions as a consumer, do not allow yourself to be pressured into making purchases, signing contracts, or committing funds. These decisions are yours and yours alone.

 

 

Fraudulent “Anti-Aging” Products

 

 

Tips for Avoiding Fraudulent “Anti-Aging” Products:

 

  • If it sounds too good to be true, it probably is. Watch out for “secret formulas” or “breakthroughs.”

 

 

 

  • Don’t be afraid to ask questions about the product—find out exactly what it should and should not do for you.

 

  • Research a product thoroughly before buying it. Call the Better Business Bureau to find out if other people have complained about the product.

 

  • Be wary of products that claim to cure a wide variety of illnesses—particularly serious ones—that don’t appear to be related.

 

  • Be aware that testimonials and/or celebrity endorsements are often misleading.

 

  • Be very careful of products that are marketed as having no side effects.

 

  • Question products that are advertised as making visits to a physician unnecessary.

 

  • Always consult your doctor before taking any dietary or nutritional supplement.

 

 

Telemarketing Fraud

 

If you are age 60 or older—and especially if you are an older woman living alone—you may be a special target of people who sell bogus products and services by telephone. Telemarketing scams often involve offers of free prizes, low-cost vitamins and health care products, and inexpensive vacations.

 

There are warning signs to these scams. If you hear these—or similar—phrases from a telephone salesperson, just say “no thank you” and hang up the telephone:

 

  • “You must act now, or the offer won’t be good.”

 

  • “You’ve won a free gift, vacation, or prize.” But you have to pay for “postage and handling” or other charges.

  • “You must send money, give a credit card or bank account number, or have a check picked up by courier.” You may hear this before you have had a chance to consider the offer carefully.

 

  • “You don’t need to check out the company with anyone.” The callers say you do not need to speak to anyone, including your family, lawyer, accountant, local Better Business Bureau, or consumer protection agency.

 

  • “You don’t need any written information about the company or its references.”

 

  • “You can’t afford to miss this high-profit, no-risk offer.”

 

Tips for Avoiding Telemarketing Fraud:

 

 

 

It is very difficult to get your money back if you have been cheated over the telephone. Before you buy anything by telephone, remember:

 

  • Don’t buy from an unfamiliar company. Legitimate businesses understand that you want more information about their company and are happy to comply.

 

  • Always ask for, and wait until you receive, written material about any offer or charity. If you get brochures about costly investments, ask someone whose financial advice you trust to review them. But beware, not everything written down is true, unfortunately.

 

  • Always check out unfamiliar companies with your local consumer protection agency, Better Business Bureau, state attorney general, the National Fraud Information Center, or other watchdog groups. Unfortunately, not all bad businesses can be identified through these organizations.

 

  • Obtain a salesperson’s name, business identity, telephone number, street address, mailing address, and business license number before you transact business. Some con artists give out false names, telephone numbers, addresses, and business license numbers—verify the accuracy of these items.

 

  • Before you give money to a charity or make an investment, find out what percentage of the money is paid in commissions and what percentage actually goes to the charity or investment.

 

  • Before you send money, ask yourself a simple question: “What guarantee do I really have that this solicitor will use my money in the manner we agreed upon?”

 

  • Don’t pay in advance for services. Pay only after they are delivered.

 

  • Be wary of companies that want to send a messenger to your home to pick up money, claiming it is part of their service to you. In reality, they are taking your money without leaving any trace of who they are or where they can be reached.

 

  • Always take your time making a decision. Legitimate companies won’t pressure you to make a snap decision.

 

  • Don’t pay for a “free prize.” If a caller tells you the payment is for taxes, he or she is violating federal law.

 

  • Before you receive your next sales pitch, decide what your limits are—for example, the kinds of financial information you will and won’t give out over the telephone.

 

  • Be sure to talk over big investments offered by telephone salespeople with a trusted friend, family member, or financial advisor. It is never rude to wait and think about an offer.

 

  • Never respond to an offer you don’t understand thoroughly.

 

  • Never send money or give out personal information such as credit card numbers and expiration dates, bank account numbers, dates of birth, or social security numbers to unfamiliar companies or unknown persons.

 

  • Be aware that your personal information is often brokered to telemarketers through third parties.

 

  • If you have been victimized once, be wary of persons who call offering to help you recover your losses for a fee paid in advance.

 

  • If you have information about a fraud, report it to state, local, or federal law enforcement agencies.

 

 

Internet Fraud

 

As web use among senior citizens increases, so does their chances to fall victim to Internet fraud. Internet Fraud includes non-delivery of items ordered online and credit and debit card scams. Please visit the FBI’s Internet Fraud webpage for details about these crimes and tips for protecting yourself from them.

 

 

Investment Schemes

 

 

As they plan for retirement, senior citizens may fall victim to investment schemes. These may include advance fee schemes, prime bank note schemes, pyramid schemes, and Nigerian letter fraud schemes.

Nigerian Letter or “419” Fraud

 

Nigerian letter frauds combine the threat of impersonation fraud with a variation of an advance fee scheme in which a letter mailed, or e-mailed, from Nigeria offers the recipient the “opportunity” to share in a percentage of millions of dollars that the author—a self-proclaimed government official—is trying to transfer illegally out of Nigeria.

 

The recipient is encouraged to send information to the author, such as blank letterhead stationery, bank name and account numbers, and other identifying information using a fax number given in the letter or return e-mail address provided in the message.

 

The scheme relies on convincing a willing victim, who has demonstrated a “propensity for larceny” by responding to the invitation, to send money to the author of the letter in Nigeria in several installments of increasing amounts for a variety of reasons.

 

Payment of taxes, bribes to government officials, and legal fees are often described in great detail with the promise that all expenses will be reimbursed as soon as the funds are spirited out of Nigeria.

 

In actuality, the millions of dollars do not exist, and the victim eventually ends up with nothing but loss.

 

Once the victim stops sending money, the perpetrators have been known to use the personal information and checks that they received to impersonate the victim, draining bank accounts and credit card balances.

 

While such an invitation impresses most law-abiding citizens as a laughable hoax, millions of dollars in losses are caused by these schemes annually. Some victims have been lured to Nigeria, where they have been imprisoned against their will along with losing large sums of money.

 

The Nigerian government is not sympathetic to victims of these schemes, since the victim actually conspires to remove funds from Nigeria in a manner that is contrary to Nigerian law.

 

The schemes themselves violate section 419 of the Nigerian criminal code, hence the label “419 fraud.”

 

Tips for Avoiding Nigerian Letter or “419” Fraud:

 

  • If you receive a letter or e-mail from Nigeria asking you to send personal or banking information, do not reply in any manner. Send the letter or message to the U.S. Secret Service, your local FBI office, or the U.S. Postal Inspection Service. You can also register a complaint with the Federal Trade Commission’s Complaint Assistant.

 

  • If you know someone who is corresponding in one of these schemes, encourage that person to contact the FBI or the U.S. Secret Service as soon as possible.

 

  • Be skeptical of individuals representing themselves as Nigerian or foreign government officials asking for your help in placing large sums of money in overseas bank accounts.

 

  • Do not believe the promise of large sums of money for your cooperation.

 

  • Guard your account information carefully.

 

 

Reverse Mortgage Scams

 

The FBI and the U.S. Department of Housing and Urban Development Office of Inspector General (HUD-OIG) urge consumers, especially senior citizens, to be vigilant when seeking reverse mortgage products. Reverse mortgages, also known as home equity conversion mortgages (HECM), have increased more than 1,300 percent between 1999 and 2008, creating significant opportunities for fraud perpetrators.

 

Reverse mortgage scams are engineered by unscrupulous professionals in a multitude of real estate, financial services, and related companies to steal the equity from the property of unsuspecting senior citizens or to use these seniors to unwittingly aid the fraudsters in stealing equity from a flipped property.

 

In many of the reported scams, victim seniors are offered free homes, investment opportunities, and foreclosure or refinance assistance. They are also used as straw buyers in property flipping scams. Seniors are frequently targeted through local churches and investment seminars, as well as television, radio, billboard, and mailer advertisements.

 

A legitimate HECM loan product is insured by the Federal Housing Authority. It enables eligible homeowners to access the equity in their homes by providing funds without incurring a monthly payment. Eligible borrowers must be 62 years or older who occupy their property as their primary residence and who own their property or have a small mortgage balance. See the FBI/HUD Intelligence Bulletin for specific details on HECMs as well as other foreclosure rescue and investment schemes.

 

Tips for Avoiding Reverse Mortgage Scams:

 

  • Do not respond to unsolicited advertisements.

 

  • Be suspicious of anyone claiming that you can own a home with no down payment.

 

  • Do not sign anything that you do not fully understand.

 

  • Do not accept payment from individuals for a home you did not purchase.

 

  • Seek out your own reverse mortgage counselor.

 

If you are a victim of this type of fraud and want to file a complaint, please submit information through the FBI’s electronic tip line or through your local FBI office. You may also file a complaint with HUD-OIG by calling HUD’s hotline at 1-800-347-3735.

 

Recommended:

“The bible of eldercare”—ABC World News. “An indispensable book”—AARP. “A compassionate guide of encyclopedic proportion”—The Washington Post. And, winner of a Books for a Better Life Award. How to Care for Aging Parents is the best and bestselling book of its kind, and its author, Virginia Morris, is the go-to person on eldercare for the media, appearing on Oprah, TODAY, and Good Morning America, among many other outlets.

How to Care for Aging Parents is an authoritative, clear, and comforting source of advice and support for the ever-growing number of Americans—now 42 million—who care for an elderly parent, relative, or friend. And now, in its third edition, it is completely overhauled and updated, chapter-by-chapter and page-by-page, with the most recent medical findings and recommendations. It includes a whole new chapter on fraud; details on the latest “aging in place” technologies; more helpful online resources; and everything you need to know about current laws and regulations. Also new are fill-in worksheets for gathering specifics on medications; caregivers’ names, schedules, and contact info; doctors’ phone numbers and addresses; and other essential information in one handy place at the back of the book.

From having that first difficult conversation to arranging a funeral and dealing with grief—and all of the other important issues in between—How to Care for Aging Parents is the essential guide. Read the reviews.

 

You may also be interested in:

Elder Abuse Questions and Answers

Easy Home First Aid Kit

Preparing For Your Elderly Parent to Move In

Be Aware of Bone Diseases in the Elderly

Convincing Your Parents to Transition to Assisted Living

Assisted Living Questions and Answers

First Signs of Alzheimer’s Disease

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Investigate Reverse Mortgages

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Reverse Mortgages

If you’re 62 or older – and want money to pay off your mortgage, supplement your income, or pay for healthcare expenses – you may consider a reverse mortgage.

A reverse mortgage is a relatively new invention for financial institutions. Reverse mortgages offer people that own their homes with no outstanding balance a monthly payment for the equity value of their home.

Reverse Mortgages are regulated by the government and have certain rules and regulations which must be followed. They allow you to convert part of the equity in your home into cash without having to sell your home or pay additional monthly bills.  

A reverse mortgage provides the property owner the ability to get consistent paychecks over a multi-year time frame based upon the equity value in the home.  You can use this money at your discretion for paying medical bills, the upkeep of your home, travel or whatever you wish.

 

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But take your time: a reverse mortgage can be complicated and might not be right for you. A reverse mortgage can use up the equity in your home, which means fewer assets for you and your heirs. If you do decide to look for one, review the different types of reverse mortgages, and comparison shop before you decide on a particular company.

 

 

Read on to learn more about how reverse mortgages work, qualifying for a reverse mortgage, and getting the best deal for you.

 

How Do Reverse Mortgages Work?

 

When you have a regular mortgage, you pay the lender every month to buy your home over time. In a reverse mortgage, you get a loan in which the lender pays you. Reverse mortgages take part of the equity in your home and convert it into payments to you – a kind of advance payment on your home equity. The money you get usually is tax-free. Generally, you don’t have to pay back the money for as long as you live in your home. When you die, sell your home, or move out, you, your spouse, or your estate would repay the loan. Sometimes that means selling the home to get money to repay the loan.

There are three kinds of reverse mortgages: single purpose reverse mortgages – offered by some state and local government agencies, as well as non-profits; proprietary reverse mortgages – private loans; and federally-insured reverse mortgages, also known as Home Equity Conversion Mortgages (HECMs).

If you get a reverse mortgage of any kind, you get a loan in which you borrow against the equity in your home. You keep the title to your home. Instead of paying monthly mortgage payments, though, you get an advance on part of your home equity. The money you get usually is not taxable, and it generally won’t affect your Social Security or Medicare benefits. When the last surviving borrower dies, sells the home, or no longer lives in the home as a principal residence, the loan has to be repaid. In certain situations, a non-borrowing spouse may be able to remain in the home.

 

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Here are some things to consider about reverse mortgages:

  • There are fees and other costs. Reverse mortgage lenders generally charge an origination fee and other closing costs, as well as servicing fees over the life of the mortgage. Some also charge mortgage insurance premiums (for federally-insured HECMs).
  • You owe more over time. As you get money through your reverse mortgage, interest is added onto the balance you owe each month. That means the amount you owe grows as the interest on your loan adds up over time.
  • Interest rates may change over time. Most reverse mortgages have variable rates, which are tied to a financial index and change with the market. Variable rate loans tend to give you more options on how you get your money through the reverse mortgage. Some reverse mortgages – mostly HECMs – offer fixed rates, but they tend to require you to take your loan as a lump sum at closing. Often, the total amount you can borrow is less than you could get with a variable rate loan.
  • Interest is not tax deductible each year. Interest on reverse mortgages is not deductible on income tax returns – until the loan is paid off, either partially or in full.
  • You have to pay other costs related to your home. In a reverse mortgage, you keep the title to your home. That means you are responsible for property taxes, insurance, utilities, fuel, maintenance, and other expenses. And, if you don’t pay your property taxes, keep homeowner’s insurance, or maintain your home, the lender might require you to repay your loan. A financial assessment is required when you apply for the mortgage. As a result, your lender may require a “set-aside” amount to pay your taxes and insurance during the loan. The “set-aside” reduces the amount of funds you can get in payments. You are still responsible for maintaining your home.
  • What happens to your spouse? With HECM loans, if you signed the loan paperwork and your spouse didn’t, in certain situations, your spouse may continue to live in the home even after you die if he or she pays taxes and insurance, and continues to maintain the property. But your spouse will stop getting money from the HECM, since he or she wasn’t part of the loan agreement.
  • What can you leave to your heirs? Reverse mortgages can use up the equity in your home, which means fewer assets for you and your heirs. Most reverse mortgages have something called a “non-recourse” clause. This means that you, or your estate, can’t owe more than the value of your home when the loan becomes due and the home is sold. With a HECM, generally, if you or your heirs want to pay off the loan and keep the home rather than sell it, you would not have to pay more than the appraised value of the home.

 

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As you consider whether a reverse mortgage is right for you, also consider which of the three types of reverse mortgage might best suit your needs.

Single-purpose reverse mortgages are the least expensive option. They’re offered by some state and local government agencies, as well as non-profit organizations, but they’re not available everywhere. These loans may be used for only one purpose, which the lender specifies. For example, the lender might say the loan may be used only to pay for home repairs, improvements, or property taxes. Most homeowners with low or moderate income can qualify for these loans.

Proprietary reverse mortgages are private loans that are backed by the companies that develop them. If you own a higher-valued home, you may get a bigger loan advance from a proprietary reverse mortgage. So if your home has a higher appraised value and you have a small mortgage, you might qualify for more funds.

Home Equity Conversion Mortgages (HECMs) are federally-insured reverse mortgages and are backed by the U. S. Department of Housing and Urban Development (HUD). HECM loans can be used for any purpose.

HECMs and proprietary reverse mortgages may be more expensive than traditional home loans, and the upfront costs can be high. That’s important to consider, especially if you plan to stay in your home for just a short time or borrow a small amount.

How much you can borrow with a HECM or proprietary reverse mortgage depends on several factors:

  • your age
  • the type of reverse mortgage you select
  • the appraised value of your home
  • current interest rates, and
  • a financial assessment of your willingness and ability to pay property taxes and homeowner’s insurance.

 

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In general, the older you are, the more equity you have in your home, and the less you owe on it, the more money you can get. Usually, you can take out up to 60 percent of your initial principal limit in the first year. There are exceptions, though.

Shopping For A Reverse Mortgage

 

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If you’re considering a reverse mortgage, shop around. Decide which type of reverse mortgage might be right for you. That might depend on what you want to do with the money. Compare the options, terms, and fees from various lenders. Learn as much as you can about reverse mortgages before you talk to a counselor or lender. And ask lots of questions to make sure a reverse mortgage could work for you – and that you’re getting the right kind for you.

 

Here are some things to consider:

  • Do you want a reverse mortgage to pay for home repairs or property taxes? If so, find out if you qualify for any low-cost single purpose loans in your area. Staff at your local Area Agency on Aging may know about the programs in your area. Find the nearest agency on aging at eldercare.gov, or call 1-800-677-1116. Ask about “loan or grant programs for home repairs or improvements,” or “property tax deferral” or “property tax postponement” programs, and how to apply.
  • Compare fees and costs. This bears repeating: shop around and compare the costs of the loans available to you. While the mortgage insurance premium is usually the same from lender to lender, most loan costs – including origination fees, interest rates, closing costs, and servicing fees – vary among lenders.
  • Understand total costs and loan repayment. Ask a counselor or lender to explain the Total Annual Loan Cost (TALC) rates: they show the projected annual average cost of a reverse mortgage, including all the itemized costs. And, no matter what type of reverse mortgage you’re considering, understand all the reasons why your loan might have to be repaid before you were planning on it.

 

Your Right to Cancel

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With most reverse mortgages, you have at least three business days after closing to cancel the deal for any reason, without penalty. This is known as your right of “rescission.” To cancel, you must notify the lender in writing. Send your letter by certified mail, and ask for a return receipt. That will let you document what the lender got, and when. Keep copies of your correspondence and any enclosures. After you cancel, the lender has 20 days to return any money you’ve paid for the financing.

 

So Is A Reverse Mortgage Right For You?

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Only you can decide what works for your situation. A counselor from an independent government-approved housing counseling agency can help. But a salesperson isn’t likely to be the best guide for what works for you. This is especially true if he or she acts like a reverse mortgage is a solution for all your problems, pushes you to take out a loan, or has ideas on how you can spend the money from a reverse mortgage.

For example, some sellers may try to sell you things like home improvement services – but then suggest a reverse mortgage as an easy way to pay for them. If you decide you need home improvements, and you think a reverse mortgage is the way to pay for them, shop around before deciding on a particular seller. Your home improvement costs include not only the price of the work being done – but also the costs and fees you’ll pay to get the reverse mortgage.

Some reverse mortgage salespeople might suggest ways to invest the money from your reverse mortgage – even pressuring you to buy other financial products, like an annuity or long-term care insurance. Resist that pressure. If you buy those kinds of financial products, you could lose the money you get from your reverse mortgage. You don’t have to buy any financial products, services or investment to get a reverse mortgage. In fact, in some situations, it’s illegal to require you to buy other products to get a reverse mortgage.

Some salespeople try to rush you through the process. Stop and check with a counselor or someone you trust before you sign anything. A reverse mortgage can be complicated, and isn’t something to rush into.

 

 

The bottom line: If you don’t understand the cost or features of a reverse mortgage, walk away. If you feel pressure or urgency to complete the deal – walk away. Do some research and find a counselor or company you feel comfortable with.

 

Whether a reverse mortgage is right for you is a big question. Consider and research all your options.  Below is an infographic to help you visualize and determine if a reverse mortgage might be a good option for you.  

This infographic below was copied from AAG; I am using it for illustration purposes only, and I am not endorsing, nor am I affiliated with AAG.

 

Is a Reverse Mortgage Right For Me Infographic

Please share any thoughts or experience with reverse mortgages below.

 

Compare mortgage rates at GetMyLender.com

 

Related:

Burial or Funeral Insurance

Writing a Will Properly

Estate Planning Mistakes

Cost Effective Wills

Make a Living Will Today

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