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What's Your Plan


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These slides highlight a way to manage risks associated with living longer and protecting income and assets.

These slides highlight a way to manage risks associated with living longer and protecting income and assets.

Published in: Economy & Finance, Business

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  • 1. Why living a long-life requires more than good luck. Rick Nappier (888) 824-6919
  • 2.
    • To qualify for long-term care insurance:
      • Applicants must not use walkers, use a respirator, or have obvious disqualifying health events
      • Agent records list of your prescribed medications
      • Health records may be reviewed by an underwriter
      • A simple, personal financial worksheet
      • A nurse visit may be required to answer health questions and verify height/weight.
      • You will receive several mandatory handbooks authored by State regulatory agencies.
    • What is your age? Your spouse’s age?
      • Are you currently taking any prescription drugs?
      • What do you estimate as your height and weight?
      • Are you using any walking aid or oxygen equipment?
    Rick Nappier (888) 824-6919
  • 3.
    • About Clarence Nappier...
    • Long-Term Care Insurance agent with various carriers since 2004
    • Licensed insurance agent since 2000
    • Former corporate manager with Fortune 500 company
    • Fifteen years experience in marketing as sales manager
    • Owner of a long-term care insurance policy since 2006
    • Military veteran
    • Avid sports fan, youth soccer club manager
    • Musician
    Rick Nappier (888) 824-6919
  • 4.
    • You know what was good about the good old days?
    Rick Nappier (888) 824-6919
  • 5.
    • Think for a moment about what happened to people ‘back in the day’ who had:
    • A Stroke; or
    • A Heart Attack; or
    • Cancer
    • Your chance of surviving was less than it is today.
    Rick Nappier (888) 824-6919
  • 6.
    • Every day, modern medicine creates more and more ways for people to live longer. That’s the good news.
    • Physical activity and nutrition have caused people to live longer.
    Rick Nappier (888) 824-6919
  • 7.
    • Some definitions…
    • Long term care
      • Generally described as providing care and services when a person is unable to perform activities of daily living (ADLs) such as toileting, bathing, dressing, eating, transferring and continence OR has a severe cognitive impairment. Long term care requires custodial, not skilled care.
    • Skilled care
      • Care that is so complex and complicated that it is only administered under a plan of care designed by a doctor and executed by a skilled staff of nurses.
    • Custodial care
      • Care aligned with assisting you with activities of daily living (ADLs) or supervision caused by a severe cognitive impairment.
    Rick Nappier (888) 824-6919
  • 8.
    • Long term care is only for old people
      • The truth is a long-term care event can happen to anyone at anytime. Based on the definition of long-term care, any accident or sickness that causes a person to lose the ability to perform two of the six ADLs would trigger the need for long-term care.
    • My health insurance or Medicare provides long-term care benefits.
      • Long-term care is provided on a limited basis, typically after a hospitalization and ordered by a physician.
    • LTC insurance MUST BE PURCHASED BEFORE long-term care services are needed.
      • Generally, healthy people qualify to purchase long-term care insurance.
      • The logic is similar to trying to purchase homeowner’s insurance after a fire or disability insurance after a major injury.
    • Medi-Cal/Medicaid long-term care service is equal to private pay service.
      • Do your homework by visiting a Medi-Cal facility and a private pay facility.
      • Access to home care is not a primary Medi-Cal/Medicaid benefit.
    Rick Nappier (888) 824-6919
  • 9. Rick Nappier (888) 824-6919
  • 10.
    • They do and they don’t...want to take care of you.
    • However…
        • They will, at the beginning, because they love you and are worried you may not be safe.
    Rick Nappier (888) 824-6919
  • 11.
    • The chances of needing care in a nursing home is 43%.
    • The impact of a chronic illness only affects you, not your family.
    Rick Nappier (888) 824-6919
  • 12.
    • The 43% statistic often used is misleading. It states that past the age of 65, 43% may spend time in a nursing home.
    • The actual chance of spending your remaining days in a nursing home is far less: 1% between 65-74 and 6% between 75-84.
    Rick Nappier (888) 824-6919
  • 13. Rick Nappier (888) 824-6919 Pensions, Portfolios, Assets... Medi-Cal (California) Medicaid (Rest of U.S.) Look Back Avoidance (30-month period)
  • 14. Funding Options Medicare Medi-Cal Long Term Care Insurance Self Funding Rick Nappier (888) 824-6919
  • 15. Assessment? Medicare pays nothing for custodial care. Rick Nappier (888) 824-6919 Long Term Care Insurance Pays For: Medicare Pays for: Home care Only for skilled or rehabilitative services Adult day care Nothing Assisted care living Nothing Skilled nursing home Pays for no more than 100 days of care only if skilled or rehabilitative services are required, ordered by a physician.
  • 16. Most states have a “Home & Community Program” that makes limited funds available to keep people, who otherwise would be in a nursing home, in the community. Services are generally limited and accompanied by long waits. Approximately 10% of beds in Assisted Care Living facilities are paid by Medi-Cal. Rick Nappier (888) 824-6919 Long Term Care Insurance Pays For: Medi-Cal/Medicaid Pays for: Home care Pays for primarily skilled for rehabilitative services Adult day care Very limited Assisted care living Pays very little Skilled nursing home Pays for custodial as well as skilled and rehabilitative services
  • 17.
    • Questions to ask yourself…
    • What is your retirement plan?
    • For what purposes, did you plan to use post-retirement earned from assets and income earned?
    • Even now, these assets are covered by forms of insurance.
    Rick Nappier (888) 824-6919
  • 18. Rick Nappier (888) 824-6919 Asset Portfolio Asset Protection Portfolio Car  Car insurance House  Hazard insurance Family  Life insurance Income  Disability insurance Wealth  More life insurance Portfolio at retirement  ???
  • 19. Your retirement portfolio may now be exposed to the real risk of having to pay for long-term care if you live a long life. Rick Nappier (888) 824-6919
  • 20.
    • Unlike health insurance that pays only for skilled care, LTCI pays for custodial care.
    • Benefits are paid for continuum of care already discussed:
      • Home care
      • Adult day care
      • Assisted living
      • Skilled nursing home care
    Rick Nappier (888) 824-6919
  • 21.
    • Life and other forms of insurance protect your assets during working years.
    • LTCI protects your retirement portfolio so it can fulfill the purpose for which it was intended, which is enjoying retirement.
    • Otherwise, you may have to divert retirement income and eventually invade principal and assets to pay for your care.
    Rick Nappier (888) 824-6919
  • 22.
    • CA Department of Insurance (CDI) and Department of Health Services (DHS) who manage the Partnership Program have suitability requirements for clients to meet and agent training to assist with LTCI marketing.
    Rick Nappier (888) 824-6919
  • 23.
    • Suitability : LTCI is not right for everybody and LTCI must make financial sense for someone to buy long-term care insurance. The “Personal Worksheet” is required by states before insurance carriers can accept an application. See suitability criteria below:
    • Age
      • Pre-Retirees: 50-64
      • Recent Retirees: 65-74
    • Financial
      • Income: Minimum of $30,000 per year, as long as LTC insurance premium does not exceed 7 percent of income
      • Assets: Amounting to at least the cost of one year of nursing home care (e.g., $30,000)
    • Consider the definition of insurance: Paying regular premiums is a more efficient and manageable way to provide for future LTC costs than trying to accumulate an individual savings account large to cover the potential expenses. Insurance is the transfer of risk from you to a pool of insured individuals.
    Rick Nappier (888) 824-6919
  • 24. < $25,000 Spend Down & Medi-Cal California Partnership > $500,000 Self-Insure
    • How Partnership Works
    • Private insurers develop policies approved by DHS and CDI.
    • Individuals purchase policies based on good health and financial suitability.
    • Private policies are back-stopped by public benefits.
    • If insurance runs out, policyholder can apply for public benefits.
    • Each $1 of insurance payout PROTECTS and an equal amount of assets.
    • Result: Policyholders get need long-term care and lifetime protection of assets.
    • Peace of mind.
    Rick Nappier (888) 824-6919
  • 25. The Time Value of Benefit Compounding 15 Rick Nappier (888) 824-6919 “ Non-Exempt Assets” LTC Insurance Payouts Medi-Cal Spend Down Requirement Person A $50,000 $50,000 $0 Person B $200,000 $200,000 $0 Person C $1,000,000 $500,000 $500,000 Person D $200,000 $0 $200,000 Today’s Dollars $210 x 1825 Days = $383,250 After 15 years $383,250 * 1.05 = $796,229
  • 26. Rick Nappier (888) 824-6919 Non-countable Countable Cash less $2,000 Cash over $2,000 A Home (principal residence) Stocks/Bonds, Mutual Funds A Car IRA’s, Keogh’s, CD’s Household goods Single Premium Deferred Annuities Business property & real estate T-Bills/Notes, Saving Bonds Term life insurance Investment property A mortuary plot/cemetery plot (up to $1500) Whole life insurance (face value > $1500) Home equity <= $750,000 (using appraisal) Vacation homes Second vehicles
  • 27.
    • Managed by the CA Dept of Health Services (DHS) since 1981.
    • Presents claims against the Estates of certain deceased Medi-Cal beneficiaries within 90 days of death.
    • Estate Recovery collections for FY 2004-05 exceeded $58M.
    • July 2004 DHS issued regulations that all annuities, retirement accounts, life estates are subject to recovery regardless of the funding source (includes revocable transfer of real property).
    • Estate Recovery is barred from claiming:
      • During the lifetime of a surviving spouse; or
      • When there is a surviving child who is under the age 21; or
      • When there is a surviving child who is blind or disabled.
    Rick Nappier (888) 824-6919
  • 28.
    • Specifically approved long-term care insurance policies allow CA residents to protect specified amounts of assets from consideration at the time of Medi-Cal eligibility.
    • Converting a potentially countable asset, to an exempt asset, is called asset protection.
    • As an example, a Partnership policy pays $100,000 in benefits and a person has $100,000 in a CD, the benefits paid converts the status of the CD from non-exempt to exempt. The CD then has the same rights as any other exempt asset.
    • For Estate Recovery purposes, the exempt/non-exempt labels are removed and all assets, less the benefits paid under a Partnership policy, are subject to Recovery.
    Rick Nappier (888) 824-6919
  • 29. Partnership (TQ) Plan/Design and Policy Features
    • Nursing Facility & Residential Care Facility (RCF) Only Policy
      • Nursing home
      • Residential care facility (Assisted Living)
    • Integrated/Comprehensive Benefits Policy (Nursing and RCF Care as well)
      • Home health care
      • Personal care
      • Homemaker services
      • Adult day care (health and social)
      • Respite for family caregiver
      • Hospice
      • Independent care management
    • “ Nursing Facility and Residential Care Facility Only” Policies
      • Provides 24-hour nursing service under a planned program of policies/proc.
      • Duly licensed physician available to furnish medical care in emergencies
      • At least one nurse who employed there full-time
      • Nurse on duty or on-call at all times
      • Maintains clinical records for all patients
    Rick Nappier (888) 824-6919
  • 30. Assisted Living Facility Costs- Average- $1,808 per month Range- $810 - $4,520 per month Averages by area- Sacramento $1,728 per month Bakersfield/Fresno $1,804 per month Southern California $1,780 per month Bay Area $2,186 per month Rick Nappier (888) 824-6919
  • 31. Assisted Living Facility Costs- Average- $2,811 per month Range- $945 - $8,568 per month Averages by area- Sacramento $2,729 Bakersfield/Fresno $2,810 Southern California $2,615 Bay Area $3,213 Rick Nappier (888) 824-6919
  • 32.
    • Guaranteed Renewable.
    • 30-Day Free Look. (30 days begins after you receive policy)
    • Outline of Coverage (delivered at the time of application or presentation)
    • Changing your benefits. You have the right to reduce your benefits in return for a lower premium to make it more affordable (by reducing the Daily Benefit or Number of Years).
    • Shoppers Guide.
    • Checklist and Counseling Information.
    Rick Nappier (888) 824-6919
  • 33.
    • Step-down Provisions for Lower Premium (not subject to underwriting)
      • Can reduce Daily Benefit/Policy Duration
      • Convert from Comprehensive to Facility Only
      • Benefits Not Allowed to Fall Below Established Minimums
      • Insurer Provides Notice of Option of Time of Lapse, Rate Increase, Upon Request
    • Step-up Coverage
      • Ability to increase coverage amount, add new benefits in the future (subject to increase premium and new underwriting).
    • Rate stability and LTCI and the California Partnership
      • Insurers have right to raise premiums across a group of policyholders issued in the same “risk class” (generally, policy form) IF claims levels exceed those anticipated in the pricing assumptions.
      • Rate increases have to proven by Insurers and approved by California Department of Insurance.
      • Rate increases shall not be approved over 40% (forty-percent) over 3-year period.
    Rick Nappier (888) 824-6919
  • 34. Thank You for Your Participation! Rick Nappier (888) 824-6919