Tag Archives: Insurance Policies

Federal Legislation Allows States to Develop Long-Term Care Partnership Programs

Federal Legislation Allows States to Develop Long-Term Care Partnership Programs

President Bush signed the Deficit Reduction Act of 2005 into law on February 8, 2006. Among other issues, this legislation offers all states more latitude in the way they operate Medicaid programs. One of the most significant changes, as outlined in Section 6021 of the law, allows states to develop Long-Term Care Partnership programs. These programs permit individuals who have exhausted their private long-term care insurance to access Medicaid without the same means-testing requirements as other applicants. Any state that wants to develop such a partnership program must meet the extensive federal requirements outlined in the provisions. Private long-term care insurance policies are also subject to stringent requirements in order for the insured to be eligible for the program.

The first long-term care insurance partnership programs were developed in the 1980s to encourage people to buy private long-term care insurance instead of relying solely on Medicaid. The original programs were only permitted in California, Connecticut, Indiana, and New York and were designed to allow anyone who had bought a qualifying long-term care policy and used up their benefits, to retain a designated amount of assets and still qualify for Medicaid as long as they met all other eligibility criteria.

Under the Deficit Reduction Act, private long-term care policies must meet even more criteria than before, including federal tax-qualification, and having certain consumer protection and inflation provisions. Inflation protection is a major qualifying criterion under the current law. Purchasers of long-term care policies that are under the age of 61 must have a policy with compound annual inflation protection.  

When an individual purchases a long-term care policy, they are usually offered a choice of inflation protection riders. One is the simple inflation rider. In this instance, the policy’s original benefit amount is increased by a defined percentage (usually 3-5%) on an annual basis. Another option is the compound inflation rider.  In this case, the benefit amount is increased annual by a defined percentage of the current benefit amount, not the original benefit amount.  Compound inflation protection provides a rapid increase in the benefit amount, providing a larger pool for the insured to draw from. Although a 5 percent increase is what most insurance companies typically offer for compound inflation protection, the Deficit Reduction Act lets the individual states decide on the applicable percentage rate.  

Long-term care insurance purchasers between the ages of 61 and 75 must also have some level of inflation protection. However, the law has not defined what that level should be. The Deficit Reduction Act also mandates the U.S. Department of Health and Human Services to develop a reciprocity agreement that enables purchasers of private long-term care insurance to use their benefits in other partnership states.

Be sure to speak with an advisor to discuss your long-term care needs and whether your state offers a Long-Term Care Partnership program.

Long-Term Care Partnership Program Makes Policy Purchases More Attractive to Consumers

Long-Term Care Partnership Program Makes Policy Purchases More Attractive to Consumers

Few expenses can deplete a lifetime of savings as rapidly as the need for long-term care. The Long-Term Care (LTC) Partnership Program, a federally supported, state-operated initiative, helps individuals protect themselves against this possibility by encouraging them to purchase long-term care insurance policies.

Basically, the program works like this: An LTC Partnership Program-qualified policy will cover the cost of long-term care initially, after which time the policy owner will be able to apply for Medicaid to pay for additional long-term care services-but without having to spend down personal assets as would normally be required. By permitting individuals to protect a portion of their personal assets, the program is intended to provide an incentive to purchase a qualified long-term care insurance policy, a result that would benefit individual consumers and insurance companies, too, by creating a more active market for long-term care insurance.

At the same time, states participating in the program hope to save dollars by having more individuals pay at least a portion of long-term care expenses with policy benefits, thereby delaying the point in time at which Medicaid kicks in. Medicaid currently accounts for close to 49% of overall long-term care funding, while private health and long-term care insurance pay just over 7%, according to information from the National Conference of State Legislatures.

The LTC Partnership Program began in the mid-1980s. Currently, qualified policies are available for sale in 23 states, according to the Long-Term Care Partnership Program Technical Assistance Website. Most other states have programs in various stages of development or approval.

Program specifics will vary state to state. For example, some use a dollar-for-dollar model: If an individual purchasing a qualified long-term care insurance policy worth $150,000 exhausts policy benefits, he or she can qualify for Medicaid to pay for additional long-term care expenses without having to spend down $150,000 worth of personal assets. Other states use a total assets model: Individuals who purchase qualified coverage of at least a set dollar amount can protect all individual assets after they have exhausted policy benefits.

States set the requirements for qualified long-term care policy provisions. These may include whether qualified policies must be comprehensive or facility-only, and minimum daily benefit amounts.

Statistics on the ever-rising cost of long-term care services make it clear how great the need is for long-term care planning. According to Genworth Financial’s 2009 Cost of Care Survey, individuals needing long-term care services will see the following national averages:

• $183 per day for a semi-private room ($203 for a private room) in a nursing home that provides 24-hour-a-day skilled care.

• $2,825 per month for a private room in an assisted living facility providing assistance with personal care, as well as some medical care.

• $18 per hour for home health aid services provided by a non-Medicare-certified but state-licensed agency (for example, assistance with bathing, dressing, transferring, etc.).

• $46 per hour for home health aid services, sometimes including skilled care, when provided by a Medicare-certified agency.

• $10 per hour for adult day care services in a community-based setting.

Companies exploring adding a long-term care benefit to their voluntary benefits offerings should check to see whether partnership program plans are available in their states. The advantages of such policies-in a time when the need for long-term care services is on the rise, along with the cost of such services-can help make long-term care a voluntary benefit that employees truly welcome.

New Insurance Policies Blend Long-Term Care and Life Insurance Coverage

New Insurance Policies Blend Long-Term Care and Life Insurance Coverage

Many people take a gamble when it comes to planning for their long-term care needs: They assume they will probably never need long-term care services, or that if they do need these services, they will rely on their savings to cover the cost. Consequently, their “planning” consists of doing nothing. This clearly isn’t a practical solution, because an extended period of long-term care could cause a person financial ruin.

The insurance industry has developed a new kind of coverage for people who hesitate to buy a long-term care insurance policy. This new type of coverage blends the benefits of life insurance with the protection of long-term care. Here’s how it works:

You pay a lump-sum premium for a universal life insurance policy, which builds up a tax-deferred cash value, in addition to providing life insurance that will pay a death benefit to your beneficiaries. If you need long-term care services, you can use this death benefit to help pay for the cost. Depending on the terms of the coverage, a $500,000 life insurance policy might pay from $200,000 to $500,000 toward the cost of nursing home care, in-home care and/or assisted living expenses. The amount used to pay for long-term care expenses is deducted from the death benefit, and any part of the death benefit that is not used to pay for long-term care expenses is paid to your beneficiaries as life insurance proceeds. These proceeds are generally free from federal income tax.

A blended life insurance/long-term care policy costs more, but there are potential advantages that may make this additional cost worth it for your situation. You have some earmarked, guaranteed funds to help pay for any needed long-term care services. If you don’t need long-term care services, your beneficiaries receive the unreduced death benefit. In addition, universal policies typically charge a premium that is guaranteed to at least maintain the basic benefit, although it may not be enough to build cash value. That eliminates the problem of rising rates on long-term care insurance that prompt many people to shy away from buying this type of coverage.

If you decide to buy a blended life insurance/long-term care insurance policy, be sure you understand the long-term care benefits it would provide. Exactly what type of long-term care services would the policy pay for-In-home care? Assisted living? Adult day care? Nursing home care? How does the policy determine the amount of long-term care benefits it would pay? For example, does the policy pay a percentage of the total death benefit, or does it pay a percentage of the death benefit monthly?

Check if you can add inflation protection coverage. Find out if there are any conditions under which premiums could increase. Also, make sure that the policy is “tax-qualified,” so that long-term care benefits won’t be taxed as income.

Every person’s needs vary, but if this type of dual long-term care and life insurance coverage suits your needs, you’re able to buy two types of insurance protection in a single policy, and with a single premium.

Consider Short-Term Health Insurance

Consider Short-Term Health Insurance While Looking for a New Job

If you find yourself in between jobs, you have already discovered that finding affordable health insurance is no easy task. While COBRA provides you the right to continue your previous employer’s coverage, the monthly premiums can be downright unaffordable.

Many people find short-term health insurance, also called temporary insurance, to be an affordable alternative to COBRA. This coverage helps bridge the gap between having an employer-sponsored plan and waiting for your next job.

Leaving a job often means leaving group medical coverage behind, a risky move if you don’t have other insurance options. Short-term insurance policies help remove the gamble, but they typically only protect against unforeseen sickness or injury.  Pre-existing conditions are usually excluded.

Premiums for short-term coverage are usually much cheaper than the premiums paid for COBRA. However, the costs can still seem high for a person who just lost their job. It may be tempting to forgo insurance altogether, but financial security is the main reason people buy short-term health insurance in the first place.

Without coverage, an unexpected trip to the hospital could send a person deep into debt. In fact, several published studies cite medical bills as a leading cause of bankruptcy. Short-term health insurance is designed to cover these catastrophic events.

Beyond financial protection, temporary insurance can also help prevent future insurance claims from being rejected under HIPAA, or Health Insurance Portability and Accountability Act, laws.  If an individual maintains creditable insurance coverage without more than a 63-day break in coverage, they are considered to have maintained continuous coverage, and exclusions for pre-existing conditions would not apply.  This applies even if the short-term policy excluded coverage for those same pre-existing conditions.  Approved short-term insurance policies are considered creditable coverage.

The terms of short-term medical plans usually run from 30 days to a maximum of one year, depending on state requirements. Some policies are designed to provide coverage for a specific number of days with premiums paid upfront, while other policies offer flexible monthly payment plans.

Since temporary insurance is only designed to last a few months, policyholders still need to plan for a long-term solution. If you find a new job and enroll in your new employer’s group insurance plan, make sure to find out when the new coverage starts. While it’s not a long-term solution, people in transition should consider temporary insurance as an interim solution to ease financial and healthcare concerns.

Temporary Medical Health Insurance

For many people the task of discovering competitively priced temporary medical health insurance can be quite hard. No matter what the reason that you need affordable short- term medical insurance is there are lots of methods of achieve it. Whether you may need it because you are changing jobs, schools, retired, graduating, employed, unemployed, or moving you may be eligible to apply for short- term medical health insurance. What many people want to know is what precisely is short- term medical health insurance. One of the large benefits of short- term medical insurance is the low monthly premium that people have to pay. Short- term medical health insurance is one of the best insurance policies plans those of you that are on the move, with monthly premiums costing less than a small car payment. This sort of health insurance is directed mostly at healthy people, their families, or kids who do not need insurance policy for pre- existing conditions, these types of insurance policy polices can give people a fall back plan if something were to happen to them or a family member. Based on the plan that they pick the benefits can be perfect for them because many of these plans can provide families with up to$ 1. 5- 2 million bucks per person for severe personal harm and health problems.

Short term insurance coverage has grown at a rapid rate in the past couple of years with the quantity of people who find themselves uninsured being near 45 million. It has recently been made essential that those who find themselves uninsured must be insured in the next few years, which has made this type of insurance even more popular with such low insurance premium as well as adequate coverage as long as you are health in the 3 years prior to being covered by the plan. There are many different companies offering budget friendly short- term health insurance for you to pick from and also different plans within each company that you can look for.

One thing to be aware when you are going to look for comparatively cheap short term medical insurance plans is that these plans will not cover you for pre- existing conditions, this is why it is a “short- term” plan, and why the monthly premiums can be so low. If you don’t know what a preexisting condition is, it is any indications, or illnesses that you maybe have had 3 years prior to the start of your cost-efficient short term health insurance coverage, this is why it is very important that when you fill out the application to tell them everything has gone on, if you do have pre- existing conditions this is not the proper type of insurance coverage for you, and although the monthly payments are going to be low, it will not be able to help you if something from the previous months catches up with you and you need serious medical attention. If this were to happen it is seems that the short- term coverage that you may be receiving may be dropped.

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