Meeting your health care Meeting your health care needs.needs.

The Long Term Care Dilemma

You’re worked a lifetime You’re worked a lifetime to accumulate your to accumulate your assets…assets…

Do you hope to pass any of your wealth on when you’re done using it?

How much of your wealth is in “qualified plan” assets, like IRA, 401k, Profit Sharing?

Qualified Plans are great wealth accumulation vehicles, but bad wealth transfer vehicles.

Have you had Have you had experience as a experience as a caregiver?caregiver?

Are your folks still alive?How old were they at death?How did they die? Was there a medical

condition?Do you have any siblings? How is their

health?How is your health?“The acorn doesn’t fall too far from the

tree.”

When is long term care When is long term care needed?needed?

Where you have Cognitive issuesHelp with activities of daily living.Would you like to stay in your

home as long as possible?Married couples do well together.What if there is only one of you?

Providing Medical Providing Medical Coverage...Coverage...

First there is MedicarePart A - In HospitalPart B - Out of Hospital

With Medicare Supplement Policies

Or Alternate Medicare Plans like the HMO’s

There is very limited coverage for skilled care or home care needs.

Legislative changes in Legislative changes in 19971997

It created Tax-Qualified Plans. California Partnership for Long Term Care

is confirmed and is an excellent program that continues to advocate for consumers.

Policies premiums are deductible through Schedule A subject to 7.5% of AGI.

Self Employed deductions on the front page of the 1040.

Corporations can deduct premiums for LTC.

Tax Qualified FeaturesTax Qualified Features

Medical necessity cannot be a benefit trigger.

Two of Six ADL’s trigger benefitsMust certify inability to perform

ADL’s for at least 90 days.Cognitive Impairment

Described as “severe” Applies “substantial supervision” test.

The “Tax Rules”...The “Tax Rules”...

The premiums are deductible within limits as part of the itemized deductions that exceed 7.5% of Adjusted Gross Income. On your Schedule A in Year 2007.

Age 51 - 60 $ 1,100Age 61 - 70 $ 2,950Age 70 + $ 3,680

Any benefit is received income tax free. It can be deducted on the front page of your

1040, as health insurance if you’re self employed.

The intent of Congress?The intent of Congress?

The Concern for “Aging America” and it’s impact on our society financially brought it to their attention.

They wanted to keep these policies from becoming a stream of tax free “annuity” income.

To assure that contracts offer features geared toward “Long Term” care.

To protect consumers relating to disclosure guaranteed renewability and other requirements.

To help protect the integrity of the Medicaid and our own MediCal system.

Activities of Daily LivingActivities of Daily Living

These are the activities that “trigger” a claim. Usually 2 of the 6 must be deficient to go out on a claim.

Dressing Eating Toileting, doing it. Continence, holding it. Bathing Transfer, like from a bed to the chair.

Levels of Health Care Levels of Health Care Covered by Long Term Covered by Long Term Care policies.Care policies.

Skilled Nursing CareRequires care by skilled medical personnel,

available 24 hours. Intermediate Nursing Care

For daily help, ordered by a physician, less specialized and requires fewer procedures than skilled nursing care.

Custodial CareHelps a person perform activities of daily

living. ADL’s

What are the risks of What are the risks of needing Long Term needing Long Term Care?Care?

That depends on how old you live to be.

Women are twice as likely as men to enter a nursing home.

Department of Aging Statistics:

Age at Death % used NH65-74 1775-84 3685-94 60

Projected lifetime use of Projected lifetime use of nursing homes for nursing homes for persons who reached persons who reached age 65 in 1990.age 65 in 1990.

They project 57% will never use a nursing home.

19% will use it for less than a year.15% will use it from 1 to 5 years9% will be there more than 5

years.

How much does it cost How much does it cost for nursing home care?for nursing home care?

A lot!A Typical California Nursing Home Costs

$54,000 per year in today's dollars.A more realistic number is between

$48,000 and $80,000 a year in LA and Orange Counties.

What will it cost in the future with inflation?This risk is a risk worth looking at.

What is Long Term Care What is Long Term Care Insurance?Insurance?

It provides a financial benefit when health and personal care services are needed.Home Health Care agency servicesAdult Day Care centersNursing Home Care at all levelsRespite Care for your care givers.

What is the Medi-Cal What is the Medi-Cal Solution to Long Term Solution to Long Term Health Care?Health Care?

Take care of yourself as best you can, until you have depleted all or most of your assets.

Then apply for Medi-Cal benefits.Medi-Cal rules for persons in medical

institutions and nursing facilities differ from rules used to determine eligibility for persons in the community.

The California The California PartnershipPartnership for Long for Long Term CareTerm Care

Medi-Cal is a resource when there are no longer any funds available.

You “Qualify” for benefits through the spend down.

The Partnership says that if you take the time to “manage some of this risk yourself” through this insurance, then Medi-Cal will offer you dollar for dollar protection of assets for all the dollars spent out of your own long term care policy. You get an “exempted asset” letter stating the amount protected.

A brief look at the Medi-A brief look at the Medi-Cal Eligibility RulesCal Eligibility Rules

There is exempt property and non-exempt property.

Exempt Property includes a car, household goods and the home. The home is exempt, but subject to a lien.

Non-exempt Property includes cash over $2000, ($3000 when married) investments, second cars, vacation homes, cash values of insurance....

The Medi-Cal Spend The Medi-Cal Spend DownDown

Excess property must be reduced to be eligible for Medi-Cal.

A transfer of nonexempt property includes a “look back” period of 36 months from date of transfer (60 months for trusts) to determine ineligibility.

Medi-Cal limits for Medi-Cal limits for Married Couples when Married Couples when one is in a Nursing one is in a Nursing Home:Home:“Spousal Impoverishment” provisions

of the 1988 Medicare Catastrophic Coverage Act (MCAA) entitles the non-institutionalized spouse to keep a certain amount of the couple’s combined and separate property.

As of 1/1/07 the Community Spouse Resource Allowance is about $92,000 of assets and $2300 a month of income.

When is Long Term Care When is Long Term Care needed?needed?

When you have a chronic medical condition, with a physical or mental limitation, requiring assistance with activities of daily living.

In case of a cognitive impairment that could include confusion or disorientation or similar dementia.

Who needs long term Who needs long term care insurance?care insurance?

People age 50 and older are usually interested in their long term health care protection.

People with assets and net worth in excess of $250,000 should consider it.

People should consider their own families longevity and health issues to evaluate their need for coverage.

How is a policy How is a policy designed?designed?

It reimburses up to a fixed dollar amount per day for Nursing Home or facility or a monthly amount of money for Home Care.

After a waiting period or deductible period that you choose. Usually 0, 20, 30, 60, 90, 120 or 180 days.

To a maximum dollar benefit amount or an unlimited pool of money.

The policy may include inflation protection.

Some of the “User Some of the “User Friendly” benefits Friendly” benefits provided by the policyprovided by the policy

A “Care Coordinator” to help you and your family understand your choices and the care you need.

Home Modification BenefitTherapeutic Devise BenefitCaregiver Training BenefitMedical Alert System BenefitRespite Care - For your care giver.

Inflation Protection is Inflation Protection is important.important.

$150 Daily Benefit increased by 5% Compound Interest Rider.

Protecting your assets.Protecting your assets.$100,000 Principal Sum – your asset now, @5% could earn, $ 5,000 a year to pay a premium for a couple.

$162,000 - Initial 3 year Benefit

$150 a day Nursing Home

or $4500 a month Home Care

With 5% Compound Inflation Protection

An ExampleAn Example

Male 65 & Female 60$162,000 “Bucket” of funds each$150 a day, $4500 a month5% Compound Inflation Protection45 day Elimination Period

(deductible)$5,000 annual premium

The Outline of Coverage The Outline of Coverage FormForm

An Outline of Coverage is a brief description of the important policy features provided to the prospective buyer at the time of initial solicitation. California law requires this standardized document be provided as a basis of product comparison.

Your 30 day “Free Your 30 day “Free Look”...Look”...

A 30 day “free look” period is provided with all Long Term Care policies. You may return the policy within 30 days of it’s delivery to you, and have all the premiums and fees refunded by the insurance company if you do not want the policy.

UnderwritingUnderwriting

Complete an application for coverage, and submit one month’s premium.

The insurance company will write to your doctor.

You’ll receive a personal phone call from the Insurance Company or possibly a face to face assessment from the paramedical company.

They’ll make you the They’ll make you the offer...offer...

Once your policy is approved, the insurance company will issue a policy to you, and give you the 30 day free look offer to accept it.

The broker will deliver the policy to you and your 30 days begins.

To get a proposal we To get a proposal we need...need...

Your ageYour marital statusYour smoking historyYour health, past and presentA little information on your lifestyleYour financial situationWhat you want your policy to do

for you!

Your proposal will Your proposal will include,include,

How much daily benefit is purchased$80 to $300 per day

How long the waiting period will be20, 45, 100 or 30, 60, 90, 120, 180 days

And how much benefit to buy2, 3 or 4 yearsor an Unlimited amount.

And offer inflation protection.

Thank you for your Thank you for your interest in Long Term interest in Long Term Care protection.Care protection.

Let us prepare a personalized proposal for your consideration.

We represent a variety of quality companies that specialize in Long Term Care insurance.

Let our Long Term Care insurance specialist answer your questions!

Thank you for the opportunity to be of service.

How can you help How can you help yourself?yourself?

Meet with a knowledgeable advisor to discuss your own situation. You need to be able to disclose information about your assets, your income and your health.

Review a proposal to determine the premium. Consider your own family history and your risk. Some insurance may be appropriate.

UnderwritingUnderwriting

Don’t be afraid to complete an application and see if you’ll qualify for a policy.

Money pays for a policy, but your health allows you to get it.

You’re guaranteed the right to Not Take the policy, if you don’t want it in the end. Any money collected is returned.

We help you make better We help you make better decisionsdecisions

about money!about money!

Call on us today!Thank you for your interest.

Melissa Shaw, CFPMelissa Shaw, CFP

Accent Insurance Brokerage26477 Rancho Parkway SouthLake Forest, CA 92630800-729-6344949-699-1662www.MelissaShawPlanner.com

Let us help you meet Let us help you meet your needs.your needs.

Talk with your broker or financial advisor today.