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NAIC Partnership Update 2009. Agenda. DRA 2005 & Impact Partnership defined NAIC / Partnership Training state requirements training solutions. DRA 2005. Known for Medicaid eligibility changes Opened Partnership Programs to all states Requires new LTC agent training mandates. - PowerPoint PPT Presentation
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04/21/23CLTC Partnership Training
1
NAIC Partnership Update 2009
04/21/23CLTC Partnership Training 2
Agenda
DRA 2005 & Impact
Partnership defined
NAIC / Partnership Training
state requirements
training solutions
04/21/23CLTC Partnership Training 3
DRA 2005
Known for Medicaid eligibility changes
Opened Partnership Programs to all states
Requires new LTC agent training mandates
The Deficit Reduction Act of 2005 and its impact on
Medicaid planning
The basics… The look-back period has been increased from 3 to 5
years.
The start of the penalty for gifts made during the preceding 5 years begins on the date of application for benefits: there is no “credit” for the penalty which, under the old law started on the date the gift was made.
The use of Medicaid friendly annuities is still allowed but the state must be named the beneficiary.
Continued…
The state can deny eligibility if a home has more than either $500,000 or $750,000 in equity.
Entrance fees in CCRC’s may have to be spent on nursing home care before Medicaid will pay.
States can now receive Medicaid waiver to establish partnership programs
Winners & losers
Increasing the look-back period
Winners The state. Nursing homes. Long-term care insurance: If people
want to protect assets they have to anticipate they will need nursing home care at least 5 years before they actually go in. That is next to impossible to determine.
Reverse mortgage companies: The family may decide to keep the person home longer and pay for it by taking equity out of the house.
Assisted living facilities: An ALF is cheaper than a nursing home.
Losers
Medicaid planning attorneys. With a 3 year look-back they can likely make a fee by telling the family of an institutionalized loved one that they only have to pay for this period. A 5 year look-back basically bankrupts the family.
A Medicaid plan i.e. gifting assets must not take place 5 years before applying for benefits. It is unlikely
the family will dispose of assets.
Changing the start of the penalty period
Winners The state
Nursing homes: No more half-a-loaf equals more private pay.
Long-term care insurance: It is now very difficult to protect assets if a person is near to or actually in a facility. There is a strong incentive to purchase the product likely now supported by elder law attorneys.
Losers
Medicaid planning attorneys: a significant source of revenue was half-a-loaf. It’s now dead.
Medicaid friendly annuitiesWinners
The state. See a trend here?
Nursing homes: In theory there should be more private pay patients. (See “Losers”.
Long-term care insurance: Promoters of these schemes regularly bad mouthed the product. Less Medicaid planning options = more LTCi if sold correctly.
Losers Nursing homes: Making the
state the beneficiary of the annuity does not help the facility; They still get the Medicaid rate.
Medicaid planning attorneys & annuity sales reps: annuities become less attractive if the state is the beneficiary
No eligibility based on equity
Winners The state. Nursing homes. Home equity conversion
companies: The applicant will be forced to take money out of the house to reduce the equity to either $500,000 or $750,000 depending on the state
LTCI
Losers Families: They can’t hide
assets in a home anymore. Medicaid planning
attorneys: Another significant source of fees is eliminated.
Real estate brokers. No house means no commission.
Entrance fees in CCRC’s
Winners The state.
CCRC’s: They can receive a private pay rate until the entrance fee is spent. See also “Losers:
LTCi.
Losers
Children: No more inheritance.
Medicaid planning lawyers: Although not used often purchasing a CCRC’s was a way to shelter large amounts of money.
Partnership
Winners
The states Facilities and companies that
provide long-term care services.
Families: LTCi protects the family not the individual and protects lifestyle. Both are devastated when Medicaid planning is employed.
Losers
Individuals with substantial monthly income; partnership plans do not protect income
Long Term Care Partnership Plans
DRA’05 repealed the “Waxman Amendment” that mandated estate recovery. This undermined the core purpose of partnership.
States now routinely receive the necessary waiver to establish partnership programs
WHO ARE THE PARTNERS & WINNERS?
State It prevents those with assets from hiring Medicaid
planning attorneys to help them transfer assets and becoming Medicaid eligible from day one
Consumer Gives consumers strong incentives not to get rid of their
assets by offering protection if they purchase LTCi
Insurer/Agent State sponsorship & promotion translates into Increased
production
WHO PAYS NOW?State governors’ concerns today focus on rising
Medicaid costsMedicaid: 49 %Medicare: 20 %Out-of-pocket: 18 %Private LTC insurance: 8 %Other: 5 %
* Source: CMS, Georgetown Univ. 2007 PIE Charts
How Partnership works…Consumer buys private LTCI with a total benefit
value of $250,000
Consumer needs care
Consumer uses LTCI first
If they exhaust $250,000 and apply for Medicaid the program will disregard the first $250,000
Example of Asset DisregardPartnership Policy
Assets Plan Payout Medicaid Spend Down
Example 1 $ 50,000 $ 50,000 $0Example 2 $ 200,000 $200,000 $0Example 3 $1,000,000 $500,000 $500,000
Non-Partnership PolicyExample 4 $200,000 $0 $200,000
INFLATION SPECIFICS
Age 60 and under: • Some form of compound inflation protection
must be included
Age 61 – 75: • Some form of inflation protection must be
included
Age 76 +: • Must offer inflation protection • (but is not required for application)
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Partnership - NAIC Model Rules Producers must complete this new
training in order to sell LTC insurance
Even if already licensed in a Partnership plans state
Regardless of representing a Partnership policy
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NAIC Model Rules
The one-time training required shall be no less than eight (8) hours and
Ongoing training shall be no less than four (4) hours every 24 months
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States may modify these rules…
Each state has the right to adopt or modify the NAIC Model Regulation
Which creates normal chaos associated with a national program regulated by 50 Departments of Insurance
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Critical Issues Interpretation of each state’s regulations
Understanding the options available to meet the training requirements
Having multiple training solutions
Answers: www.ClearCert.com
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What’s the training solution?
CLTC Partnership Training
www.CLTCPartnershipTraining.com
Objectives
To develop and offer multiple training options that satisfy the state specific regulations that are: Simple Quick Effective
To educate producers how to: Present the subject of long-term care planning Establish a plan for long-term care Fund it, when appropriate, with LTCi
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Continuing Education
Classroom 8 hours Sign in/out No Exam Recorded 7-14 days
Correspondence Course/ On-line Exam triggers CE Proctor/Affidavit Recorded 24 hours
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Training Options: Classroom
8 hrs CE : entire CLTC/Partnership course
or
2 hrs Accelerated Prep Review (No CE)Prepares for On-Line course with Exam
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Training Options: Correspondence
On-Line course with exam State specific material included 8 hours CE from passing exam
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Questions?
www.CLTCPartnershipTraining.com
Gene Pressley 803-283-4620
