Partnership Program LTC

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Partnership Program and Long-Term Care:

Partnership Program and Long-Term Care C.E. Solutions Tracy Young, CLU, HIA, ALHC 913-980-CE4U(2348) www.continuingedsolutions.com

Long-Term Care:

2 Long-Term Care In this course we will discuss: The need for LTC The sources available How one might pay for LTC The features, benefits, exclusion and taxation of the individual long-term care coverage. We will introduce the State LTC Partnership Program - its requirements and benefits to both the state and the individual. Reference: Long-Term Care Concepts 4 th Edition Used with permission from BISYS

The U.S. Elderly Population Explosion:

3 The U.S. Elderly Population Explosion

Patient Stays In Nursing Homes:

4 Patient Stays In Nursing Homes 0-30 days 31% 1-3 months 20% 3-6 months 11% 6-9 months 7% 9-12 months 5% 12-24 months 10% 24-36 months 5% >36 months 11%

Average Length of Stay:

5 Average Length of Stay URL: http://www.elderweb.com

Websites to view…:

6 Websites to view… ( http://www.longtermcare.gov/LTC/Main_Site/Paying_LTC/Costs_Of_Care/Costs_Of_Care.aspx ) http://www.kff.org/insurance/upload/7692_02.pdf http://www.elderweb.com

Source: 2008 Cost of Care Survey, Genworth Financial, March 2008 :

7 Source: 2008 Cost of Care Survey, Genworth Financial, March 2008 Kansas Avg. Daily Nursing Home Rate : Private Avg. Daily Nursing Home Rate : Semi-Private Avg. Monthly Cost in Assisted Living Facility Home Health Aide Average Hourly Rate Homemaker Services Average Hourly Rate Adult Day Services Daily Rate State Average $133.00 $124.00 $2,468.00 $22.00 $16.00 $72.00 State Averages : When Genworth provided one rate for a specific category in a State, this figure was used as the "State Average". When Genworth's sample identified one or more cities/regions in a state, the city/regional rates were averaged with Genworth's "rest of state rate" to obtain the "State Average". Average Home Health Aide rates, as provided by Genworth, are the average of the rates from 2 types of home health agencies: those that are licensed and Medicare certified, and those that are licensed but not Medicare certified.

Source: 2008 Cost of Care Survey, Genworth Financial, March 2008 :

8 Source: 2008 Cost of Care Survey, Genworth Financial, March 2008 Missouri Avg. Daily Nursing Home Rate : Private Avg. Daily Nursing Home Rate : Semi-Private Avg. Monthly Cost in Assisted Living Facility Home Health Aide Average Hourly Rate Homemaker Services Average Hourly Rate Adult Day Services Daily Rate Kansas City $175.00 $154.00 $3,521.00 $30.00 $18.00 $63.00 St. Louis $184.00 $146.00 $2,848.00 $24.00 $19.00 $56.00 Rest of State $126.00 $119.00 $2,048.00 $20.00 $17.00 $61.00 State Average $162.00 $140.00 $2,806.00 $25.00 $18.00 $60.00

Percent in Poverty:

9 Percent in Poverty The HIAA reports that “given the average savings and assets of the elderly, about 30% would become impoverished by a three-month nursing home stay that is uninsured at today’s rates”.

Effect of Inflation on Nursing Home Costs:

10 Effect of Inflation on Nursing Home Costs Daily Charge* at 4% Inflation 3 yrs $112 5 yrs $121 10 yrs $147 15 yrs $179 20 yrs $217 25 yrs $264 * Assume an initial nursing home charge of $100 per day

Sources of Long Term Care:

11 Sources of Long Term Care Independent Living Facility Continuing Care Retirement Communities Residential Care Facility Fraternal or Religions Homes Home Health Care Adult Day Care Nursing Homes Skilled Nursing Care Intermediate Nursing Care Custodial Care

Paying for Long Term Care:

12 Paying for Long Term Care Medicare Medicare Supplement Medicaid Family Self-funding Reverse Annuity Mortgages Annuities Life Insurance (Accelerated death benefits, Life Settlements, Viaticals, Policy Loans, Withdrawals & Surrenders) Health Savings Accounts Long Term Care Insurance

National Spending on LTC:

13 National Spending on LTC Last Modified: 2/13/2009 10:54:35 AM

LTC Premium Factors:

14 LTC Premium Factors Health of Applicant Age at issue Automatic Inflation Protection Nonforfeiture Provisions Monthly Benefits (larger = higher $) Lifetime Max (larger = higher $) Company issuing policy. Elimination/Waiting period (longer = lower $) Discounts Benefits (Larger = higher $) Guaranteed Purchase Option

What are the most important provisions of the LTC policy?:

15 What are the most important provisions of the LTC policy? Policy benefits cover all levels of nursing home care – skilled, intermediate & custodial. No prior hospitalization or higher level of prior care required before benefits are payable. Policy is guaranteed renewable for life. Policy offers a choice as to the maximum daily benefit amount. Policy offers inflation-adjustment of the maximum daily benefit amount. Policy offers a choice as to the length of the benefit period . Policy offers a choice as to the length of the waiting period before benefits begin, with one option being no longer than 20 days after eligibility commences. Policy offers home health care & adult day care benefits. Policy specifically covers Alzheimer’s disease, senile dementia & mental & nervous disorders having a demonstrable organic cause. Policy waives premiums during periods when benefits are payable (or even better, during any waiting period as well).

Benefit “Triggers” for LTC:

16 Benefit “Triggers” for LTC Eating Bathing Dressing Using the toilet Continence Getting in or out of bed (transferring) Cognitive impairment or the loss of deductive or abstract reasoning that results in an individual needing supervision &/or assistance. Includes Alzheimer’s disease. Includes senility & irreversible dementia. Includes mental dysfunction caused by a stroke (or similar organic cause).

Nursing Home & Home Health Care Coverage $100 Per Day Benefit Comparison TQ vs. QPP Annual Premiums When Policy is Taken Out at Age::

17 Nursing Home & Home Health Care Coverage $100 Per Day Benefit Comparison TQ vs. QPP Annual Premiums When Policy is Taken Out at Age: Policy Provisions 55 60 65 75 79 Basic TQ Plan 30-day WP 3 year benefit period $595 $838 $1,193 $3,461 $5,656 Basic TQ Plan 30-day WP Lifetime benefit period $1,029 $1,466 $2,115 $6,148 $9,826 Partnership Plan 30-day WP 3 year benefit period $1,483 $1,850 $2,127 $5,279 $5,897 Partnership Plan 30-day WP 5 year benefit period $1,891 $2,417 $2,686 $6,718 $7,610

IRS … “Qualified” LTC premium is deductible:

18 IRS … “Qualified” LTC premium is deductible For 2008, the maximum amount of qualified long-term care premiums you can include as medical expenses has increased. You can include qualified long-term care premiums, up to the amounts shown below, as medical expenses on Schedule A (Form 1040) . Age 40 or under – $310 Age 41 to 50 – $580. Age 51 to 60 – $1,150. Age 61 to 70 – $3,080. Age 71 or over – $3,850. For 2009 there will be a small Increase in Deductible Limit for Long-Term Care Premiums: Note. The limit is for each person .

The “Partnership Program”:

19 The “Partnership Program” A person buys a Long Term Care policy that meets the State’s program requirements. If they need Long-Term care, the benefits from the LTC policy help pay for it, and the state Medicaid program does not have to cover the cost. If they continue to need LTC after their policy benefits run out, they apply for Medicaid - and do not have to spend down all of their assets!

How does the Partnership Program work?:

20 How does the Partnership Program work? It is a dollar-for-dollar approach. The individual can keep assets equal to the LTC benefits they received. This is in addition to the $2,000 in KS or $1,000 in MO they are entitled to keep. These assets are also exempt from Medicaid estate recovery.

Qualified Partnership Policy Inflation Requirements:

21 Qualified Partnership Policy Inflation Requirements Under age 61 … Inflation Protection compounded annually of either 5% or if rejected 3%. Age 61-75 … “Some level” of inflation protection Age 76 and older … Inflation protection may be provided but is not required.

Slide 22:

22 Mary James Susan William

What are your customers saying?:

23 What are your customers saying? “It won’t happen to me.” “Medicare will cover me.” “Then my Medigap policy will cover me.” “I’ll self-insure the risk myself.” “Well, I guess then that I would go on Medicaid.” “My family will take care of me.” “I’ll wait and buy long-term care insurance if and when I need it.”

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