“The two most important driving forces for the federal budget are the aging of the U.S. population and rapidly rising health-care costs.”
- Federal Reserve Chairman Ben Bernanke
A Long Term Care Benefit Plan is the conversion of an in-force life insurance policy into a pre-funded, irrevocable Benefit Account that is professionally administered with payments made monthly on behalf of the individual receiving care. This option extends the time a person would remain private pay and delays their entry onto Medicaid.
“In the coming decades, many Americans will not have a way to pay for long-term care services. As the population is aging, the need for long-term care services is exploding. However, as the need for services increases, government funding will not be able to keep up, undermining a critical component of the nation’s health care delivery system.”
–The Long Term Care Funding
Crisis Milliman Consulting
Lack of understanding
Most people falsely assume that Medicare or Medicaid will cover their choice of long term care in future.
Most people will spend all savings on long term care in a year or less.
Many people are unwilling to admit to themselves they have a need for care, don’t understand the types of care, and often don’t recognize a loved one is already providing them long term care.
10,000 Baby Boomers turn 65 every day
70% of them will need some form of long term care (40% in a nursing home)
88% of life insurance policies will never pay a death benefit (lapse or surrendered)
38% of people the apply for Medicaid own a life insurance policy that will count against them
Long Term Care Benefit Plan
Convert the death benefit of a life insurance policy into a Long Term Care Benefit Plan to cover the costs of Senior Living and Long Term Care.
No costs or fees
Simple application and approval process (30-60 days)
All types of in-force life insurance qualify
No age restrictions
No medical underwriting required– APS review and phone interview to verify care needs
No more premium payments for enrollee
Monthly payments made directly to care provider/facility
Final expense funeral benefit or account balance paid to family at time of death
Benefit can be adjusted to match changing needs
Nursing Home, Assisted Living, Home Health and Hospice all qualify
Available in all states
Medicaid qualified spend-down while remaining private pay as long as tax advantaged Benefit Account lasts**
**(sec. 1016 U.S. Master Tax Code 2008) and IRC Section 101(g)
Immediate need for Long Term Care (within 90 days)
Any type of in-force life insurance accepted
Death benefit $50,000-$1,000,000
No Age minimum
Simplified underwriting: APS review and phone interview to verify care needs
Time to close 30-60 days
Funds used for Senior Care of any form
Account can pay for outstanding balances
Monthly amount can be adjusted and moved from one care provider to another
Enrollment Example #1
Case Study: 37651290D
Policy owner: 86 MalePolicy value: $90,000 (UL)
Lapse Value: $0
Cash Value: $0
Long Term Care Benefit: $31,500 or 30% of death benefit
Enrollee approved for $31,500 total benefit with $1,800 per month payment to care provider for duration of benefit period. $4,500 Final Expense benefit issued at maturity.
Long Term Care Benefit: $150,000 or 60% of death benefit
Enrollee approved for $150,000 total benefit with a $30,000 initial benefit payment to cover first three months of care and $10,000 per month payment to care provider for duration of benefit period. $5,000 Final Expense benefit issued at maturity.
Policy Transfer- Adheres to secondary market regulations governing life settlement market.
Benefit Account- Adheres to Banking regulations and funds are FDIC-insured.
Use of Funds- Adheres to Medicaid regulations.
Policy Conversion Rights- Legal right of all policy owners and available in 50 states
Policy Conversion Bills introduced
(as of 11/13):
TX- HB 2383 (enacted into law)
CA- SB 214
FL- HB 535
KY- HB 314
LA- HB 545
MA- SB 1909
ME- LD 1092
NJ- A 4168
NY- A 7952
Grants Medicaid Department authority to educate citizens they have right to use life policies to pay for any form of care they select. Specifies Benefit Plan requirements to qualify must be an irrevocable, FDIC insured account that makes payments directly to the care provider; the person must be able to choose the form of care they want; a funeral benefit must be preserved; and if there is any unpaid account balance when the person dies it must go to the designated account beneficiary.
“…Life Care Funding puts the money in an FDIC insured account used to send monthly payments directly to a long term care provider…You can switch from one provider to another as your needs change; but you can’t use the money for a vacation (or blow it at a casino).”
“But a few state law makers who have introduced laws to publicize the [Benefit Plan] option have pointed out that it beats surrendering a policy to access government benefits while also giving families more control over how to spend the money.”
“Texas enacted a law earlier this month that gives state Medicaid officials the authority to tell people applying for help they can sell long-held life-insurance policies to a third party to pay for custodial health care of their choice.”
“Long-term care is the sleeping giant of all U.S. social problems. It is most certainly the biggest age-related challenge our country faces.”