Page 14 - HME Business, May/June 2020

2020 HME BUSINESS HANDBOOK
HOME ACCESS FINANCING
Let’s tackle the trickiest financing challenge first: Home access. Providing major accessibility improve- ments is a whole financing world
unto itself, and providers working in this world should have a good grasp of the options. Patients might need ramps, remodeling, lifts, and other more expensive upgrades and altera- tions to their home that will come at a higher price than, say, a new grab bar in the bathroom.
In these scenarios, patients need some serious financing and there
are options. One is the 203(k) loan. The Federal Housing Administration created the 203(k) loan program specifically to help homebuyers reha- bilitate homes they wish to purchase to live in. A 203(k) loan lets a quali- fied borrower not only finance the purchase price of the home, but also include the price of the necessary repairs to the home, or just the repairs — and in either scenario, this includes home access upgrades.
There are two types of 203(k) loans, and the one that is right for your intended property depends on how much work needs to be done:
• A limited 203(k) loan is intended for a home that requires only non- structural repairs.
• A standard 203(k) loan is for properties that require structural repairs, such as replacing the roof or a load-bearing wall.
A limited 203(k) provides up to $35,000 that can be added to the loan to cover the improvements, in addition to the purchase price of
the home. For a standard 203(k), the homeowner can borrow the purchase price of the home, plus the price of the improvements.
The money for the improvements is actually put into an escrow account
POINTS TO REMEMBER
• Consumer credit is finally catching on in the retail market for HME products and services, which is critical because it increases potential revenue per patient.
• Credit lets consumers finance more expensive purchases, such as mobility devices to home access upgrades.
• It also helps them more easily pay for smaller items such as co-pays or small items.
• When it comes to major home access upgrades, providers need to understand lending options, such as 203(k) loans. It’s a good idea to partner
big and small. Clients can use them to cover healthcare services and purchases that aren’t covered by insurance, and that includes HME. Moreover, these cards usually offer favorable interest terms.
Probably the most popular option in the HME industry is CareCredit. CareCredit sprang up at a time when various financing compa-
nies such as CitiGroup, JPMorgan, Chase, Humana, Capital One, and UnitedHealth Group rolled out healthcare credit cards. However, CareCredit is the one card that was left standing after many of those other options retreated from the market.
The card functions just like any other credit card: CareCredit works with providers to accept and process the card for any of its cardholders. Patients apply for a CareCredit account in the same way they would apply for other credit cards.
What makes these types of cards attractive is that they offer no-interest financing for a pre-determined amount of time. So, for six or 12,
18 or 24 months, for example, the consumer can pay off the cost of a healthcare purchase without having to pay interest. Also, this interest is deferred. What that means is that after that pre-determined period of time, if the borrower is paying back the principal, then he or she will also have to pay interest that has accrued during that time.
So, the key is for providers consid- ering adding this option to its range of supported payment methods is to ensure that they educate prospective borrowers on how the loans work.
In the same way the provider’s staff understands its products, it should understand the financing options it will support. ■
CREDIT
HOW TO INTEGRATE
CONSUMER CREDIT OPTIONS INTO YOUR HME BUSINESS’S RETAIL SALES
O ne aspect of retail sales that is finally catching on in the
HME marketplace is credit. While financing is a familiar element of other retail transactions, consumer financing hasn’t been common in the HME industry until recently.
The industry has taken stabs
at credit over the years. Most of
them were through manufacturer- driven credit programs, where an HME maker would partner with a financing company to offer credit programs to providers’ customers, but managing multiple credit programs per vendor is unwieldy to say the list.
Make no mistake; patients want credit options. Some HME offerings can be expensive and completely non-funded. In the case of home access items, for example, patients might need to finance the purchase cost and installation of items such as patient lifts or ramps. Or, in some cases, much-needed items such as mobility or respiratory devices might need to be financed in some way.
The main option has been to use
a standard consumer credit card, or opt for traditional loans for medical expenses. A variety of consumer banks offer personal loans of various types to cover major healthcare expenses, but does the provider really want the patient to go to a bank for a piece of DME? Also, what about smaller ticket items such as co-pays or lower-cost HME items?
Patients and providers alike need options for both small and big retail transactions. Fortunately, they have options now.
that is used to pay for materials and the companies being contracted to do the home access work, such as the provider and its partners. (No DIY is allowed.) Construction must begin within 30 days of the close of the loan and your work must be completed within six months.
For providers looking to help their clients with major home access purchases, partnering with a loan officer or mortgage broker is an essential relationship to forge.
OTHER ACCESS OPTIONS
Other lending options include Fannie Mae’s HomeReady Mortgage Program is designed specifically
for borrowers with low to moderate incomes, and is available to patients living on their own or someone living with a disabled family member to help them purchase an accessible home, or upgrade their existing home for home access.
Also, nearly every state has created loan programs to help lower-income borrowers with disabilities tap into lending options that offer very agree- able terms at rates and terms well below traditional home loans.
Additionally, there are special grants and other programs such
as the Department of Veterans Affairs (VA), which offers the Home Improvement and Structural Alterations and Special Home Adaptations grants for disabled veterans. Also, many state Medicaid programs offer home and commu- nity-based waivers that can help fund accessibility modifications.
HEALTHCARE CARDS
Healthcare-focused credit cards have taken off in the HME industry, because they offer way for patients to transact the out-of-pocket costs
up with a lending professional. They should also
understand state programs, VA options, etc. • Supporting a healthcare credit card is also a
smart move. A good example of a healthcare credit program that has gained considerable popularity in the HME industry is CareCredit. Learn more at www.carecredit.com.
LEARN MORE
Keep reading the Retail Sales Solution Center on the HME Business site at hme-business.com/micro- sites/cash-sales to stay on top of retail topics.
14 HMEBusiness | May/June 2020 | hme-business.com
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