I don't peeve often, but man, that one is right up there with mixing 'sell' and 'sale'. Who's teaching these people?
Are cash values subject to Medicare spend down?
- Thread starter Spin
- Start date
I don't peeve often, but man, that one is right up there with mixing 'sell' and 'sale'. Who's teaching these people?
Probably self taught . . . by watching YT videos . . .
- 10,361
You can still find GULs with very little cash value and that zero out the cash value eventually.
Problem is they are using secondary guarantees that require a certain amount of policy reserve (premiums) and taking a withdrawal reduces that reserve and could trigger additional premiums being required to prevent the policy from lapsing.
I didnt watch the video... but Im guessing he didnt mention that part...
Problem is they are using secondary guarantees that require a certain amount of policy reserve (premiums) and taking a withdrawal reduces that reserve and could trigger additional premiums being required to prevent the policy from lapsing.
I didnt watch the video... but Im guessing he didnt mention that part...
- 4,616
Agree. But everything in the video is about single premium whole life
- 16,920
Yes from listening to this they sound confused on a couple things. Obviously they are confusing Medicare and Medicaid. But it also sounds like he had been pitched the single premium policies like NGL and Unum and others have sold for years that had an Irrevocable Estate Planning Trust attached with them and thinking that the protection comes from the single premium policy itself. It definitely does not. Single premium whole-life is exactly the same as multi pay whole life when it comes to the cash value counting as a countable resource when qualifying for Medicaid.
Any place that people put money where they have access to pull any of the money back out through any method is not going to protect it during a Medicaid spend down. It is countable. And even if you put it into a policy that is attached to an irrevocable trust it is still a countable asset until five years goes by after you set up the trust. The only exception is if you set up a funeral trust or assign your policies to a funeral home they are first day exempt but there are limits on the amount you can do in some states it’s 10,000 and in others it’s $15,000. But when they do that any excess amount of the money that is not spent on the funeral is forfeited to Medicaid.
Any place that people put money where they have access to pull any of the money back out through any method is not going to protect it during a Medicaid spend down. It is countable. And even if you put it into a policy that is attached to an irrevocable trust it is still a countable asset until five years goes by after you set up the trust. The only exception is if you set up a funeral trust or assign your policies to a funeral home they are first day exempt but there are limits on the amount you can do in some states it’s 10,000 and in others it’s $15,000. But when they do that any excess amount of the money that is not spent on the funeral is forfeited to Medicaid.
Last edited:
- 5,804
This is where having family you can trust is so important. Ownership can help shift the burden.
Only a couple? That's being generous
- 4,616
I sure hope it is confusion. But this also would require that no one in the upline or downline or a single client corrected them on the fact of the Medicare/Medicaid wording. From experience, I have family members & clients in multi-line insurance that knew the difference.
but they get paid well alarming people in this fashion I bet. which is fine if it is correct. They could still sell a lot by clearly saying---this wont provided any extra protection from forced Medicaid Spend down, but the added death benefit of the policy compared to the bank money can be much better for your heirs if you dont need to liquidate all your money in the future to qualify for Medicaid. Tax free assets like life insurance, roth, after tax stock/funds tend to be the last dollars to spend down when in a medicaid spend down compared to first spending down other assets life qualified IRAs/401k, Annuity, bank cash. This is because most people in a Medicaid spend down are in 0% or low tax brackets. Better many times to leave the assets until last that get tax preferential treatment at death (Life insurance, Roth, After tax capital assets -stocks/mutual funds/land/rental property/etc)
Gee . . . if they said that no one would buy!
- 4,616
Actually. I am involved directly & indirectly with about $10-$15M in SPWL sales in Michigan alone, by PC agents. Seniors with excess lazy money in checking,savings & CD type money would by 5x this amount every year if our clients knew about it. Phenomenal tool that checks almost all the boxes of what most seniors what their lazy emergency safe money to do: safe, simple, tax deferred while alive, tax free at death, accessible for emergencies, no probate at death & leverage death benefit of 20%-100% more than the deposit put in.
For the majority of seniors that don't need it to provide monthly income & have other investments & income, it will be far superior tax wise than NQ Annuity. NQ MYGA annuity are good, but most seniors are in 0% or low tax bracket meaning they are deferring the annual tax bill they don't owe on the interest deferred to eventually have it taxed in a lump sum in their kids tax bracket. SPWL tax wise during life is just like NQ Annuity (LIFO), but SPWL is tax free at death.
Our small PC company in a single state has over $1B in annuities on deposit. Less than 8% of the clients ever take money out during lifetime, meaning they have a ticking time bomb of a tax bill that will be owed at death by beneficiaries on the gains. The ones I talk to, I tell them to call their CPA to see if they can take any out tax free & redeposit so that that portion moves from taxable gain portion to the cost basis tax free portion. You would be shocked how many are told they can take 20-25k out each year tax free as the standard deduction will wipe it away. This generally is the clients living mostly on social security only & small amount of RMDs, interest. NQ annuities selling point of tax deferral is really only a positive feature for above average tax payers. Average to low or 0% tax payers may actually be negatively impacted by tax deferral compared to other assets reported each year like CDs,Muni bonds
Similar threads
