Helping to Understand Long Term Care Insurance, Long Term Care Partnership Programs and Group (Federal) Long Term Care Insurance

Transcription

1 Helping to Understand Long Term Care Insurance, Long Term Care Partnership Programs and Group (Federal) Long Term Care Insurance Michael Nakashima, CFP Certified Financial Planner with Transamerica Financial Advisors, Inc. Chartered Federal Employee Benefits Consultant (ChFEBC) Lauren Brown Financial Planner with Transamerica Financial Advisors, Inc.

2 Disclaimer Michael Nakashima is a financial planner and he works with a lot of federal employees and their spouses. The information contained in this presentation has been researched on the websites of the Office of Personnel Management ( the Thrift Savings Plan ( and through the other related sources. The Federal Government does not favor, endorse, or recommend any commercial company, supplier, product, Innovate Financial, Inc., or Michael Nakashima. Michael Nakashima is an Investment Advisor Representatives offering securities and investment advisory services through Transamerica Financial Advisors, Inc. (TFA) Member FINRA & SIPC and Registered Investment Advisor. Non-securities products or services are not offered through TFA. TFA and its representatives do not give tax or legal advice. This material is provided for informational purposes only and should not be construed as tax or legal advise. Clients and other interested parties must consult with and rely solely on their own independent advisors regarding their particular situation and the concepts presented here. Transamerica Financial Advisors, inc. is not responsible for the validity, completeness, or accuracy of any information provided in this presentation. TFA and Innovate Financial, Inc. are not affiliated.

3 About the Speaker Mike Nakashima lives in Minneapolis with his wife, Kelly, and their three children: Adilyn (age 5), Emma (4) and Teddy (1). He is originally from Dubuque, IA and is a graduate of the University of Iowa. Mike has been in financial services since In 2006 he obtained his Chartered Federal Employee Benefits Consultant designation and opened his own company, Innovate Financial, Inc.. He is an Independent Financial Planner through Transamerica Financial Advisors, an Investment Advisory Representative (IAR), and a Chartered Federal Employee Benefits Consultant (ChFEBC). He has worked for TD Ameritrade, Jackson National Life, Transamerica Financial Advisors, J.A. Counter & Associates, and is owner of Innovate Financial, Inc. Michael Nakashima is a registered representative and investment advisor representative offering securities and investment advice through Transamerica Financial Advisors, Inc., a registered Broker/Dealer and investment advisor, Member FINRA. Contact Information Innovate Financial, Inc. Attn: Mike Nakashima 6701 Penn Ave. Ste 200 Richfield, MN Ph: (612) Toll Free: (866) Fax: (612) mnakashima@tfamail.com Website

4 Long Term Care Insurance 1. Who needs it? 2. What protection does it offer? 3. How do I choose a policy?

5 Who Needs Long Term Care Insurance 1. People/Couples who want to protect their assets and each other from impoverishment. 2. People who want an advocate for their long term care should a need arise. 3. People who plan for the future and want to make sure that the children are not burdened with years of long term care for an elderly parent.

6 What Protection Does Long Term Care Insurance Offer? 1. Provides a insurance benefit to people who own a policy and cannot perform two activities of daily living or have significant cognitive impairment. Activities of Daily Living: Toileting, Incontinence, Transferring, Dressing, Eating and Bathing 2. Medicare and your FEHB provide for skilled medical care. Generally speaking, a long term care need usually requires non-medical care and your FEHB and Medicare are not designed to pay benefits for long term care. 3. A Long Term Care Partnership Approved policy allows for additional estate protection (to be covered). The Federal Long Term Care Insurance Program does not carry the LTCI Partnership endorsement.

7 Choosing a LTCI Policy 1. Daily or Monthly Benefit: The amount your policy will pay out. Some carriers offer daily amounts and others offer monthly. 2. Length of Benefit: 1, 2, 3, 4, 5 Years or Lifetime Benefit 3. Elimination Period: ranges from 0 to 100 days and is your deductible. If you have 100 Days of Elimination Period you will pay the first 100 Days of Care. 4. Inflation Rider: required for most partnership programs including the state of Minnesota. Increases the daily/monthly benefit, and the pool of money, by set rate (usually 3% to 5%). 5. Is it Long Term Care Partnership Approved? The Fed LTCI is not Partnership Approved. 6. Pool of Money: Your Daily Benefit x 365 x Years of Benefit 1. Monthly Benefit x 12 x Years of Benefit = Pool of Money. 2. Daily Amount x 365 x Years of Benefit = Pool of Money 3. Example: $200 Day x 365 (days) x 3 (years) = $219, Private Sector policies offer additional benefits like Shared Care that offer a pooled benefit for both spouses so that if one does not use the benefit and dies the remaining spouse will inherit it.

8 Long Term Care Partnership Program In states with LTCI Partnership Programs if you purchase certain long-term care insurance policies will be able to protect more of their assets under the state s LTCI Partnership Program. Currently, in order to qualify for Medical Assistance, a consumer must first draw down his or her personal assets. The Long Term Care Partnership gives consumers the ability to protect assets up to the amount of long-term care coverage they purchase. - For example, consumers who purchase $100,000 of coverage would be able to keep an additional $100,000 of their assets if benefits from a long-term care policy are exhausted and they need to apply for Medical Assistance. For more information google Your State + Long Term Care Partnership Program.

9 Partnership Approved VS. Not Partnership Approved HELEN MARY LOU Helen and Mary Lou each own a long term care insurance policy with the following: $200 Day 3 Year Benefit 90 Day Elimination Inflation Rider $200 x 365 (days) x 3 (Years) = $219,000 Helen s policy is Long Term Care Partnership Approved She can protect a portion of her estate equal to the amount her LTCI policy pays for her care: Helen can keep $219,000 in her estate and qualify for Medicaid (+ $2000 that Medicaid normally allows) Mary Lou s policy is NOT LTCI Partnership Approved She will not receive the dollar for dollar asset protection and she is a widow. If Mary Lou uses the $219,000 LTCI benefit from her policy she will have to spend her estate down to $2000 before Medicaid starts assisting her with the LTC expenses.*

10 The Importance of the Partnership Plan for Long Term Care Insurance The Federal LTCI Program is not LTCI Partnership Approved. There have been two periods with the Federal Long Term Care program where they offered policies on a Simplified basis with fewer health questions. The first occurrence was 2001 and the 2 nd was While you can purchase the FED LTCI at any time you would now have to go through Full Underwriting which is what you ll have to go through if you buy a Individual Policy on your own (or with a spouse). If the cost is close, and the underwriting is the same, you would want to go with a Private Sector Partnership Approved Long Term Care Insurance Policy. The Federal LTCI Program is not state LTCI Partnership Approved and I would avoid buying from the Fed LTCI program unless they have another Simplified Issue Open Season and your health is marginal.

11 Inflation Rider Rules for most Long Term Care Partnership Programs Example Provide inflation protection if the person is under age 76: - For a person who is less than 61 years of age as of the date of purchase, the policy provides either annual compounded inflation protection of not less than 3% or annual compounded inflation protection of not less than a rate based on changes in the consumer price index. Since nursing home and other long-term care rates increase regularly, inflation protection helps the policy s daily - benefit keep up with long-term care costs.for a person who is at least 61 years of age but less than 76 years of age, the policy provides either annual compounded inflation protection of not less than 3%, annual compounded inflation protection of not less than a rate based on changes in the consumer price index or an automatic inflation feature that provides annual simple inflation increases at a rate not less than 3%. - Check your own state s rules for qualifying for the long term care partnership program. Google (your state) Long Term Care Partnership Program

12 The Federal Long Term Care Insurance Program John Hancock is the underwriter of the new LTCI Fed Program. Every seven years (approximate) the federal program group LTCI program is renegotiated. New contract in 2010 brought an increase in premium for people who had the inflation rider on the Fed LTCI policies they purchased prior to You can get a quote for the federal long term care program at or by contacting us. We can quote you the fed program and the fully underwritten partnership policies if you contact us at The Federal Long Term Care Insurance Program does not have the Long Term Care Partnership Program qualification.

13 New Federal LTCI Program Options Coverage Plan: - Comprehensive: Home Care, Adult Day Care, Respite Care, Facility Care. New Plan has all facilities at 100% of the Daily Value. Daily Benefit - The FLTCIP offers eight DBAs from $100 to $450 in $50 increments. Length - 2 Year, 3 Year, 5 Year or Unlimited benefit period Elimination Period - 90 Days Inflation Protection - 4% or 5% Compounding or Future Purchase Option The Federal LTCI Program is Not LTCI Partnership Approved!

14 Questions about Long Term Care Insurance?

15 Resources 2015 Innovate Financial, Inc. Innovate Financial, Inc & Michael Nakashima Financial Updates, News, Calculators Life Insurance Calculators Financial Industry National Regulatory Authority (FINRA) Office of Personnel Management & FEGLI Thrift Savings Plan Federal Long Term Care Insurance Program Vision Plan Dental Plan Contact Innovate Financial, Inc. for additional information about our services: (612) This power point presentation offers links that operate outside Innovate Financial, Inc., is not responsible for the validity, completeness, or accuracy of any information provided on those sites.

16 Thank you for attending this training session today! For more information about Mike Nakashima please visit our website at Our website has this training manual available for printing, upcoming retirement and federal benefit web training events, and other retirement planning information. Adilyn & Emma s 1 st Day of Preschool Need financial planning assistance? Please contact us toll free at (866)