Tag Archives: LTC

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


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

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.


     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!

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

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

Mutual of Omaha is back in California

In early March, Mutual of Omaha came back to California with two new Long Term Care products.  The one I really like is the MutualCare Custom Solution. It, as the name suggests, is very customizable with some new rider options to the industry.

Policy Design Options:

  • Policy limits: $50,000 – $500,000 at $25,000 increments
  • Monthly Benefits:  $1,500 – $10,000 at $500 increments
  • Elimination Period: 0, 30, 90, 180 or 360 Calendar Days

This way of designing a plan gives a large range of coverage options, allowing it to be optimized for the client. In addition to the benefit options there are a number of Inflation Protection options. You can set up 1% – 5% compound inflation at .25% increments. By choosing any of the Inflation Protection options you are given the opportunity to increase the inflation protection each year.

Included Benefits in the policy:

  • Cash Benefit: 40% of the monthly benefit available in cash (up to $2,400)
  • Home Health Care – so you can stay at home as long as possible
  • Facility Care – up to 100% of the monthly benefit
  • Respite Care – to provide relief for unpaid caregivers (up to one month per calander year)
  • Hospice Care
  • International Benefit – up to the monthly maximum for 12 months
  • Waiver of Premium – waives the premiums while on claim

Optional Riders:

  • Waiver of Elimination Period for Home Health Care – 0 day elimination for home health care
  • Shared Care – if you reach your maximum benefit you can use your partners (until your partner has one year of care left) If either partner dies, the surviving partner will receive the the deceased partners benefits without having to continue paying the deceased partners premium
  • Joint Waiver of Premium – If one partner is on claim, both premiums are waived
  • Survivorship Benefit – If one partner dies after both policies have been in force for 10 years the premium is waived for the surviving partner

Another rider that I really like is the Security Benefit rider. If your partner doesn’t have a LTC policy, the Security Benefit will pay an additional 60% of the monthly reimbursement that can be used to help pay for care or living expenses. This is a great option for those with a spouse that may be uninsurable due to health reasons.

This new policy by Mutual of Omaha is also priced very competitively, making it a great addition to the California Long Term Care Insurance options.



It’s time to ponder what changes lie in store for our long term care insurance industry. Some  predictions are easy to make, while others require looking into a very cloudy crystal ball.


The economy: The most recent economic indicators would lead one to believe that the recession of 2008 has truly ended, at least for many of our better-off citizens. An increased consumer confidence level could lead to more willingness on the part of consumers to protect themselves with long term care insurance.


The government: Washington will continue to be in gridlock. Little will happen in 2015, and long term care issues will be relegated to committee conversations.


The products: Current products will be sold with shorter and richer benefits. But there will be an increase of new long term care insurance products   Many of these will contain elements that are common to current life insurance products. In addition, life insurance hybrid and linked products will become significant and varied.


The need: Another year has passed, and once again, the need has grown. Here come the baby boomers, now ages 51 to 69, whose parents are mostly in their eighties, getting sick and needing care. More and more baby boomers will learn from their parent’s experience that they need a long term care plan. If you are among these folks, please call us before it’s too late.