Exchanging Your Tax Deferred Annuity To One With A Tax Qualified Unlimited Long Term Care Rider

Annuity, Long Term Care, , , , ,

CASE STUDY:

Creating an LTC Plan by Exchanging Your Tax Deferred Annuity To One With A Tax Qualified Unlimited Long Term Care Rider

Client Profile:  Ted is 72 and Jane is 68.  They have planned well and their children are grown and financially independent.  Their portfolio is conservatively invested.  They are interested in asset preservation.  They just reviewed their Medicare and Medicare Supplement policy and they are concerned about their “exposure” to long-term care.

Objectives:     Protecting their retirement income by plugging up the holes in Medicare that expose their nest egg to un-insured LTC expenses.

Strategy:          Cover both Ted and Jane with a 1035 exchange of their $ 103,500 Annuity (out of surrender with cost basis of $ 60,000) to a One America Annuity with a “tax qualified” LTC rider.  Since this is a tax qualified LTC policy, the gain in the annuity can be sheltered.

Snap Shot
One America Annuity Care
 Joint Age 70
1035 Exchange Annuity to Annuity
Creates LTC for both spouses
1035 Exchange Annuity to Annuity Care  $103,500
COB rider creates catastrophic LTC coverage that can never be exhausted Unlimited
Coverage includes: Home Care, Assisted Living, Skilled Nursing Home, memory Care  $3,000 per month each spouse
Combined Monthly Premium for   COB Rider $219 per month
Can never be increased

Highlights:  Shelter the gains in the Existing Annuity Policy
                         Both spouses can be on claim at the same time
                         LTC can never be exhausted

Deadline 5/31 for Women to Apply at Current Low Premiums with Life Secure

Long Term Care, , , , , , , ,

Life Secure (owned by Blue Cross Blue Shield of Michigan) has just announced that like the rest of the nation’s Long Term Care insurers, they will change their premium price structure for women. They have already filed the paperwork with the California Department of Insurance to update to their new policies. In fact, on June 1st they will be suspending LTC sales in California until their new policies are approved.

The premium cost for women, effective after 5/31 will be a minimum of 25% higher, even more for single women.

There is a 2 week window of opportunity, before Life Secure catches up to the other LTC companies.

The “sex” distinct pricing reflects an industry wide long term care claims history that women account for two of every three LTCi claims benefits paid. Genworth, Mutual of Omaha, Transamerica and John Hancock have already implemented a gender pricing structure.

Here is an “apples to apples” annual premium comparison for a married female age 55 for a $ 250,000 policy.

 

ANNUAL PREMIUM
     Life Secure       $1,419     
     Mutual of Omaha       $1,796     
     Genworth       $2,493     
     TransAmerica       $2,030     
     John Hancock       $2,611     

 

The message is clear – if you are a woman, or married to one, waiting to act is going to assure that a plan will be more expensive.

If your application reaches Life Secure prior to May 31, you will still have 4-6 weeks to think about LTC before finalizing the coverage.

If you think you want long-term care insurance, now is the time to apply!

It’s almost Tax Time: If you have long term care insurance remember to advise your Accountant

Uncategorized

2015 & 2016 TAX DEDUCTIONS FOR LONG TERM CARE INSURANCE PREMIUMS

Self-employed individuals can deduct tax-qualified long-term care insurance premiums as a trade or business expense.

They do not need to consider the 7.5% adjusted gross income threshold that limits individual deductions.  (IRC #162(1))

The tax deduction is allowed for the self-employed individual, for his or her spouse and other tax dependants according to each individual’s age based limit.
(Premiums can also be paid from HSAs)

Taxpayer’s Age At End of Tax Year – Deductible Limit
Age

2015

2016
40 or younger

$380

$390
41 to 50

$710

$730
51 to 60

$1,430

$1,460
61 to 70

$3,800

$3,900
71 or older

$4,750

$4,870

C-Corporations benefit from complete (100%) deductibility of tax-qualified long-term care insurance protection as a business expense similar to traditional health and accident insurance premiums.

Genworth Changing to gender rating: 3 weeks to apply at current low lower premiums

Long Term Care, , , , , , , ,

Yesterday, Genworth announced that like the rest of the nation’s leading insurers, they will change their premium price structure for women effective September 10, 2015.

The premium cost for women, effective after 9/10 will be a minimum of 25% higher, even more for single women.

There is a 3 week window of opportunity, before Genworth catches up to the other major companies.

The “sex” distinct pricing reflects an industry wide long term care claims history that women account for two of every three LTCi claims benefits paid. Mutual of Omaha, Transamerica and John Hancock have already implemented a gender pricing structure.

Here is an “apples to apples” annual premium comparison for a married female age 55 for a $ 250,000 policy.
     ANNUAL PREMIUM
     Genworth “Flex” (closes Sept 10th)      $1,116.68
     Mutual of Omaha      $1,516.29
     TransAmerica      $1,671.82
     John Hancock      $1,523.20

The message is clear – if you are a woman, or married to one, waiting to act is going to assure that a plan will be more expensive.

If your application reaches Genworth prior to September 10, you will still have 6-8 weeks to think about LTC before finalizing the coverage.

If you think you want long-term care insurance, now is the time to apply!

 

Coverage Limits of Long Term Care from Medicare and Private Health Insurance

Long Term Care, Medicare, , , , , , ,

Many families are in disbelief when a Skilled Nursing Facility Discharge Planner notifies them that they need to prepare for their loved one to come home because Medicare has not approved any more benefits.

As you can see, after day 100, Medicare does not pay for extended care.  If Medicare does not approve, then the Medicare Supplement does not kick in either.  On average, most patients are discharged within 20 days.

The below chart shows the most common types of insurance and the very limited long-term care coverage they provide.

Coverage Limits of Long-term care (LTC) Offered by Health Insurance

LTC Service Medicare Medigap Insurance Private Insurance
Overview Limited coverage for nursing home care following a hospital stay and home health if you require a nurse or other skilled provider Insurance purchased to cover Medicare cost sharing Varies, but generally only covers services for a short time following a hospital stay, surgery or while recovering from an injury
Nursing home care Pays in full for days 1–20 if you are in a Skilled Nursing Facility following a recent 3-day hospital stay. If your need for skilled care continues, may pay for the difference between the total daily cost and your copayment of $137.50 per day for days 21-100. After day 100 does not pay May cover the $137.50 per day copayment if your nursing home stay meets all other Medicare requirements Varies, but limited
Assisted living facility Does not pay Does not pay Does not pay
Continuing Care  retirement community Does not pay Does not pay Does not pay
Adult day services Not covered Not covered Not covered
Home care Limited to reasonable, necessary part-time or intermittent skilled nursing care and home health aide services, some therapies if a doctor orders them, and a Medicare-certified home health agency provides them. Does not pay for on-going personal care or only help with Activities of Daily Living (also called “custodial care”) Not covered under current policies. Some policies sold prior to 2009 offered an at-home recovery benefit that pays up to $1,600 per year for short-term at-home assistance with activities of daily living (bathing, dressing, personal hygiene, etc.) for those recovering from an illness, injury, or surgery Varies, but limited