LONG-TERM CARE ISSUES AND        ANSWERS
LONG-TERM CARE                         GREG ANDERSON• Brokerage Professionals, Inc.    – a premier full-service, wholesale...
LONG-TERM CARE          WHAT IS LONG-TERM CARE?• Refers to a broad range of services for people who need assistance on a  ...
LONG-TERM CARE                     IS NEEDED WHEN…• Inability to perform Activities of Daily Living (ADLs)    – Continence...
LONG-TERM CARE     HOME CARE                FACILITIES CARE      SERVICES:                   SERVICES:• Private Duty Nursi...
LONG-TERM CARE      THE RISK OF NEEDING LONG-TERM CARE        MAY BE GREATER THAN YOU THINK…       • Medical advances allo...
LONG-TERM CARE                               THE FINANCIAL RISKS• Roughly half of Americans 45+ say they know someone who ...
LONG-TERM CARE               THE FINANCIAL RISKS    A recent survey published by Senior Market Advisor Magazine asked:    ...
LONG-TERM CARE             HAVE YOU CONSIDERED…•   If you were to have an extended health care need, what is your written ...
LONG-TERM CARE                       THREE WAYS TO PAY1.   Out-of-Pocket     –   Your assets2.   Government Programs     –...
LONG-TERM CARE                                      #1 OUT OF POCKET• National median NH rate $75,190/annually*• Costs hav...
LONG-TERM CARE          #2 GOVERNMENT PROGRAMS                  MEDICARE• Pays for some skilled at-home care but only for ...
LONG-TERM CARE          #2 GOVERNMENT PROGRAMS                  MEDICARE• Medicare Nursing Home Payments    – First 20 day...
LONG-TERM CARE           #2 GOVERNMENT PROGRAMS                   MEDICAID• Must meet state income and asset requirements•...
LONG-TERM CARE          #2 GOVERNMENT PROGRAMS               CLASS PROVISIONS• Patient Protection & Affordable Care Act (H...
LONG-TERM CARE          #2 GOVERNMENT PROGRAMS               CLASS PROVISIONS• Department of Health and Human Services wil...
LONG-TERM CARE               #3 TRANSFER THE RISKS                 PRIVATE INSURANCE1.   Traditional Long-Term Care Polici...
LONG-TERM CARE #1 TRADITIONAL LONG-TERM CARE             POLICIES • Daily/monthly benefit • Benefit period • Elimination p...
LONG-TERM CARE    #1 TRADITIONAL LONG-TERM CARE                POLICIES•   Can cover all occurrences (NH, AL, HHC, AD)•   ...
LONG-TERM CARE   #2 LONG-TERM CARE PARTNERSHIP              POLICIES• State-by-state• Protect more assets from Medicaid• B...
LONG-TERM CARE    #3 LIFE INSURANCE W/ LONG-TERM               CARE BENEFITS•   Can cover all occurrences (NH, AL, HHC, AD...
LONG-TERM CARE    #4 ANNUNITIES W/ LONG-TERM CARE                BENEFITS•    Most have wavier of Surrender fees for NH co...
LONG-TERM CARE        TWO SECRET ADVANTAGES OF            PRIVATE INSURANCE•   Care Coordination services•   Get care soon...
LONG-TERM CARE                        CASE STUDY #1•   65 year old husband & 65 year old wife both standard rate class•   ...
LONG-TERM CARE            COMPARISON OF TRADITIONAL                LONG-TERM CARE Company         Gen        JH          M...
LONG-TERM CARE  LONG-TERM CARE BREAK-EVEN          ANALYSIS     Annual Premium $6,768   Annual Benefit $146,000   Years Pr...
LONG-TERM CARE           SPOUSAL DISCOUNT HELPS• $3,120 with discount versus $5,640 without• So what if there was NO disco...
LONG-TERM CARE    HOW ABOUT LIFE INSURANCE WITH         LONG-TERM BENEFITS?•   $150,000 GUL•   4% Monthly LTC Benefit•   $...
LONG-TERM CARE              A QUICK COMPARISON  Product                   LTC      LI  Premium                  $5,640   $...
LONG-TERM CARE                         CASE STUDY #2•   75 year-old female standard rate class•   Arizona resident•   Aver...
LONG-TERM CARE              A QUICK COMPARISON                                     LTC w/  Product                   LTC  ...
LONG-TERM CARE                         CASE STUDY #3•   72 year-old Female•   Angioplasty 2 years ago - otherwise good hea...
LONG-TERM CARE1.   Traditional Long-Term Care     –   Cost $11,940 to replace $200/day with inflation     –   Cost $2,825 ...
LONG-TERM CARE
LONG-TERM CARE            WHAT WAS ACCOMPLISHED•   Additional $162,323 available for LTC (daily max starts at $74)•   Inte...
LONG-TERM CARE                       CASE STUDY #4•   65 year-old female•   Arizona resident•   Std NT rating•   3 In Forc...
LONG-TERM CARE                     CONSIDERATIONS•   Life insurance purpose - wealth transfer•   No Current LTC coverage -...
LONG-TERM CARE    SINGLE PREMIUM LIFE INSURANCE•   DB: $334,692•   CSV: $150,000•   LTC: $468,118 total/ $5,573 monthly•  ...
LONG-TERM CARE         QUESTIONS?
LONG-TERM CARE                          NEXT STEPS•   Dig out your old policies•   Schedule a complimentary consultation• ...
LONG-TERM CARE         THANK YOU!
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WealthTrust-Arizona - Long Term Care Issues & Answers

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Educational workshop presented by WealthTrust-Arizona and special guest, Greg Anderson from Brokerage Professionals. Greg reviews issues surrounding long term care and how to best prepare for it financially.

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  • Read the slide
  • Read the slideTransfering- such as from a chair to a bed
  • Read the slideLTC – means more than just nursing homes Home Care- professional care given at homeAdult Day Care- temporary day to day care similar to child day careAssisted Care- residential care facility limited medical careNursing Home- residential care full medical care available
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  • Read the slideTraditional Long Term Care Insurance cost is based on the following:Daily/Monthly Benefit- the maximum paid for costs per day/monthBenefit Period- how many years the daily/monthly benefit will be paid if it is being maximized.Elimination Period- how long the insured has to self insure before policy benefits begin.Inflation- if added as a rider will increase the benefit based on a preselected amount ie. 5% compoundPool of Money- maximum benefit the policy will pay daily/monthly benefit x benefit period = pool of money
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  • Read the slideSpecific to each state that has one
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  • Case Coordination Services- most policies provide this benefit which helps with managing the payment of claims and the care needs of the insured. Usually the Care Coordinator is hired by the insurance company at no additional cost.You get care sooner- patients with coverage do not hesitate to use the coverage for the care they need while someone relying on their own money to pay for care will put it off.
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  • Read the slideNotice the monthly benefit with Genworth which provides flexibility in having claims paid.Notice spouse premium wavier with John Hancock.
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  • Lets compare the coverage for the husbandReturn of Premium on the LTC would increase the premium to $8,234
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  • Here are her options Read the slide
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  • WealthTrust-Arizona - Long Term Care Issues & Answers

    1. 1. LONG-TERM CARE ISSUES AND ANSWERS
    2. 2. LONG-TERM CARE GREG ANDERSON• Brokerage Professionals, Inc. – a premier full-service, wholesale insurance brokerage firm dedicated to the needs of financial advisors and their clients• Chartered Life Underwriter and Chartered Financial Consultant• More than 24 years experience in the Insurance and Financial Services industry
    3. 3. LONG-TERM CARE WHAT IS LONG-TERM CARE?• Refers to a broad range of services for people who need assistance on a regular basis for chronic illness or physical and mental disabilities.• Not usually covered by health insurance or Medicare.• LTC can include medical, social, housing, transportation or other supportive services. These can be provided by unpaid family members or friends (informal care) or by specially trained and/or licensed professionals (formal care).
    4. 4. LONG-TERM CARE IS NEEDED WHEN…• Inability to perform Activities of Daily Living (ADLs) – Continence – Transferring – Toileting – Bathing – Dressing – Eating• Cognitive impairment – Memory – Orientation – Reasoning
    5. 5. LONG-TERM CARE HOME CARE FACILITIES CARE SERVICES: SERVICES:• Private Duty Nursing • Adult Day Care• Home Health Aides • Assisted Care Facilities• Homemaker • Nursing Home Care• Chore Services• Hospice care
    6. 6. LONG-TERM CARE THE RISK OF NEEDING LONG-TERM CARE MAY BE GREATER THAN YOU THINK… • Medical advances allow more people to survive serious illnesses, injuries, and conditions • 60% of Americans who reach age 65 are expected to need LTC services at some point (according to Office of Personnel Management)1 • 40% of those receiving LTC services now are ages 18 to 64 (according to the U.S. Office of Personnel Management) 1 • The wife often cares for her husband – but who cares for her?1. “A federal case for LTC.” Employee Benefit News. 02/01/03
    7. 7. LONG-TERM CARE THE FINANCIAL RISKS• Roughly half of Americans 45+ say they know someone who has used up all their savings paying for long-term care and had to depend on Medicaid1• The national average cost of a year in a nursing home for a private room is $75,190. A semi-private room is $67,52521. American Society on Aging, Long Term Care study released 5/23/032. Genworth 2010 Cost of Care Study
    8. 8. LONG-TERM CARE THE FINANCIAL RISKS A recent survey published by Senior Market Advisor Magazine asked: How would you pay for a Long-Term care event in your family?• 21% advised they would dip into their savings/401K• 19% believed that Medicare/Medicaid would pay• 18% advised that they already have LTC
    9. 9. LONG-TERM CARE HAVE YOU CONSIDERED…• If you were to have an extended health care need, what is your written plan of care?• What is the first asset you would liquidate to pay for long-term care?• Does your current annuity, life policy or CD also provide LTC coverage in case you ever need it?
    10. 10. LONG-TERM CARE THREE WAYS TO PAY1. Out-of-Pocket – Your assets2. Government Programs – Medicare, Medicaid, CLASS Provisions3. Transfer the Risk – Private Insurance
    11. 11. LONG-TERM CARE #1 OUT OF POCKET• National median NH rate $75,190/annually*• Costs have been growing at 4.5%/year*• $500,000 portfolio earning 5% would be depleted within six years* Genworth Cost of Care Survey 2010
    12. 12. LONG-TERM CARE #2 GOVERNMENT PROGRAMS MEDICARE• Pays for some skilled at-home care but only for short-term unstable conditions and not for ongoing assistance• Nursing Home Qualification• Prior hospitalization at least three days not counting release day• Facility must be Medicare-Certified and entered within 30 days after leaving the hospital• Patient must require a skilled level of care
    13. 13. LONG-TERM CARE #2 GOVERNMENT PROGRAMS MEDICARE• Medicare Nursing Home Payments – First 20 days Medicare full cost – Next 80 days patient pays $141.50/day (increases annually) Medicare pays rest – After 100 days patient pays Full Cost• Does cover some Home Health Care costs if services include such things as part-time nursing, physical therapy, medical and social services.
    14. 14. LONG-TERM CARE #2 GOVERNMENT PROGRAMS MEDICAID• Must meet state income and asset requirements• All countable assets must be depleted to $2,000• All assets are “countable” EXCEPT: – Life Insurance with face value less than $1,500 – Personal property (clothing, furniture, jewelry etc. up to reasonable limits) – Burial funds up to $1,500 – Burial space – Auto and Home within certain limits
    15. 15. LONG-TERM CARE #2 GOVERNMENT PROGRAMS CLASS PROVISIONS• Patient Protection & Affordable Care Act (Healthcare Reform) includes the Community Living Assistance Services and Supports provisions (CLASS) which is a voluntary government program primarily designed to assist the working disabled under which participants: – Pay monthly premium through payroll estimated to be $180-$240/month – Guaranteed issue basis – 60-month waiting period – Approximate benefit $75/day for as long as disabled
    16. 16. LONG-TERM CARE #2 GOVERNMENT PROGRAMS CLASS PROVISIONS• Department of Health and Human Services will work out the terms of the program which will not go into effect for two years.• It is unclear how the final regulations will look like. However, due to the adverse selection, premiums could potentially be very high and will be subject to increase to keep the program fiscally sound, since there is no tax- payer funding of the program.• It is not clear if retirees are able to join the program.
    17. 17. LONG-TERM CARE #3 TRANSFER THE RISKS PRIVATE INSURANCE1. Traditional Long-Term Care Policies2. Long-Term Care Partnership Policies3. Life Insurance With LTC Benefits4. Annuities With LTC Benefits
    18. 18. LONG-TERM CARE #1 TRADITIONAL LONG-TERM CARE POLICIES • Daily/monthly benefit • Benefit period • Elimination period • Inflation • Pool of Money
    19. 19. LONG-TERM CARE #1 TRADITIONAL LONG-TERM CARE POLICIES• Can cover all occurrences (NH, AL, HHC, AD)• Flexible (you determine benefits and features)• Premiums not guaranteed• Premiums can be tax-deductible• If no benefits paid no benefit from premiums• Inflation protection available
    20. 20. LONG-TERM CARE #2 LONG-TERM CARE PARTNERSHIP POLICIES• State-by-state• Protect more assets from Medicaid• Benefits based on state minimums
    21. 21. LONG-TERM CARE #3 LIFE INSURANCE W/ LONG-TERM CARE BENEFITS• Can cover all occurrences (NH, AL, HHC, AD)• LTC Benefits are less flexible than traditional• Premiums can be guaranteed• No tax deduction for premiums• Can guarantee a benefit is paid LTC or DB• Full underwriting for both LTC and Life
    22. 22. LONG-TERM CARE #4 ANNUNITIES W/ LONG-TERM CARE BENEFITS• Most have wavier of Surrender fees for NH confinement• Can cover all occurrences (NH, AL, HHC, AD)• No tax deduction for charges• LTC claims draw down annuity value first• Moderate underwriting for LTC• Inflation protection available at additional cost
    23. 23. LONG-TERM CARE TWO SECRET ADVANTAGES OF PRIVATE INSURANCE• Care Coordination services• Get care sooner – eliminates procrastination when someone else pays
    24. 24. LONG-TERM CARE CASE STUDY #1• 65 year old husband & 65 year old wife both standard rate class• Arizona residents• Average Daily Cost: $200• 4 year benefit• Pool of Money:$292,000• 90-day elimination• Inflation 5% compounded
    25. 25. LONG-TERM CARE COMPARISON OF TRADITIONAL LONG-TERM CARE Company Gen JH Met Premium $6,768 $8,292 $8,582 Pool of Money $288,000 $292,000 $292,000 Maximum Benefit Monthly Daily Daily Elimination 90 90 100 Spouse Premium Waiver No Yes No
    26. 26. LONG-TERM CARE LONG-TERM CARE BREAK-EVEN ANALYSIS Annual Premium $6,768 Annual Benefit $146,000 Years Premium Paid Time Benefits Equal Premium 2 2 months 5 3 months 10 6 months 20 1 year
    27. 27. LONG-TERM CARE SPOUSAL DISCOUNT HELPS• $3,120 with discount versus $5,640 without• So what if there was NO discount?
    28. 28. LONG-TERM CARE HOW ABOUT LIFE INSURANCE WITH LONG-TERM BENEFITS?• $150,000 GUL• 4% Monthly LTC Benefit• $300,000 Total LTC Benefit• Husband $6,975 annual premium• Wife $6,114 annual premium• $13,089 total annual premium
    29. 29. LONG-TERM CARE A QUICK COMPARISON Product LTC LI Premium $5,640 $6,975 Guaranteed Premium No Yes Tax-Deductible Premium Yes No Inflation Yes No Death Benefit No Yes
    30. 30. LONG-TERM CARE CASE STUDY #2• 75 year-old female standard rate class• Arizona resident• Average Daily Cost: $200• 4 year benefit• Pool of Money: $292,000• 90-day elimination• With or without inflation?
    31. 31. LONG-TERM CARE A QUICK COMPARISON LTC w/ Product LTC inflation LI Premium $7,392 $11,424 $11,692 Guaranteed Premium No No Yes Tax-Deductible Premium Yes Yes No Inflation No Yes No Death Benefit No No Yes
    32. 32. LONG-TERM CARE CASE STUDY #3• 72 year-old Female• Angioplasty 2 years ago - otherwise good health• Has current LTC without inflation that is 8 years old• Current daily benefit is $120 for 4 years• Daily benefit insufficient
    33. 33. LONG-TERM CARE1. Traditional Long-Term Care – Cost $11,940 to replace $200/day with inflation – Cost $2,825 to add $80/day w/o inflation – Underwriting - medical records needed – Premiums already paid2. Life Insurance with Long-Term Care benefits – Cost $9,270 to replace $200/day no inflation – Cost $4,737 to add $3,000/month w/o inflation – Underwriting - probably will not qualify for standard – Premiums already paid3. Annuity with Long-Term Care benefits – Deposits $50,000 – All usual annuity benefits – 10 year surrender period – 3x the deposit in LTC benefits – Inflation can be added
    34. 34. LONG-TERM CARE
    35. 35. LONG-TERM CARE WHAT WAS ACCOMPLISHED• Additional $162,323 available for LTC (daily max starts at $74)• Internal charges start out at $58.50/month• LTC benefit grows as the annuity value grows• Underwriting limited to application and phone interview• If LTC is not used annuity value can be withdrawn or paid to a beneficiary
    36. 36. LONG-TERM CARE CASE STUDY #4• 65 year-old female• Arizona resident• Std NT rating• 3 In Force life policies $216,500 DB ($150,000 CV $0 Premiums)• No LTC coverage - too expensive
    37. 37. LONG-TERM CARE CONSIDERATIONS• Life insurance purpose - wealth transfer• No Current LTC coverage - too expensive• 1035 Exchange to Life insurance?...expenses, limited access to cash value• 1035 Exchange to Annuity?...taxable gain at death• Use cash value to fund LTC?...no guaranteed return for premiumBut, what if we rolled them all into one?
    38. 38. LONG-TERM CARE SINGLE PREMIUM LIFE INSURANCE• DB: $334,692• CSV: $150,000• LTC: $468,118 total/ $5,573 monthly• Premium: $0 , 1035 exchange of current policies
    39. 39. LONG-TERM CARE QUESTIONS?
    40. 40. LONG-TERM CARE NEXT STEPS• Dig out your old policies• Schedule a complimentary consultation• Evaluate your situation• Make adjustments as you deem appropriate• Monitor
    41. 41. LONG-TERM CARE THANK YOU!

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