I was wondering. I have been told that you can dodge a medicaid spendown a couple different ways. I was wondering if we shoud help clients do that or just sell them a LTC policy. If we do help them hide the assets then that is just depleting funds of the people who actually need it.
So, what should we do? I don't know if this is actually fact but I heard you could have a ILIT and medicaid cannot touch the ILIT if you go into a spend down. If that is true, then that would be a great way to keep assets with out purchasing LTC. Great commission for the agfent but very bad for the government.
I have heard that a few years ago the law regarding spenddown was changed so that the party who gives information to a person about an illegal spenddown will be held responsible for that act. It was, according to what I heard at a seminar, so restrictive as make it a "let's jail granny" attitude. Now, SAI, I have not researched this but will do so tomorrow.
Why would anyone want to use medicaid unless they had to? Medicaid is a horrible way to receive custodial care, you have to go to a nursing home, one that has a medicaid bed available, no home care, no assissted living.
IMO, this is backward planning and it does hurt us as taxpayers by paying claims to people that wouldn't ordinarily qualify. However, like you said, there are agents doing this and making alot of money selling annuities. I think you have to choose what kind of agent one wants to be.
Is medicaid nursing care really that much worse than if you pay? Of course no one wants to be there in the 1st place. I personally think LTC policies are expensive. I would rather sell a life policy with a LTC rider on it that will pay the DB if you do not need care.
I think it is our job to save medicaid for people who actually need it instead of using it for some rich person who is just trying to beat the system. But if that is what your clients want and you dont wanna help them hide it then you are missing out on a nice commission.
If you think LTC premiums are expensive, I suggest you review the cost of custodial care. These policies, IMO, are underpriced.
If I have someone ask me to help them hide assets by purchasing annuities, which the government continues to crack down on, I tell them to go buy from someone else. I can't really understand why anyone, once they understand how medicaid works, would ever choose to use it. The only people I see advocating this startegy are greedy heirs and unscrupulous annuity agents.
Is medicaid nursing care really that much worse than if you pay?
Absolutely, check your local quality nursing homes and ask how many medicaid beds they have available? IMO, medicaid patients are treated different than private pay, as told to me by a former nursing home staff worker.
Try this exercise, assume a client is age 60 and purchase a LTC policy with a 5000 per month benefit payable for 4 years with compound inflation. Compare custodial care costs at 5000 per month and compound both out 20 and 25 years, now show to a client and ask if they had rather pay the LTC premium or the actual potential cost, assuming they can afford the premium without impacting their lifestyle. The insurance cost is minimal compared to the risk of not having. I have seen relatives and clients that had insurance and those that didn't, the ones that had it and needed it had one less thing to worry about. I have an aunt currently that the family is writing checks for 7500 per month for care.
I did a quote for a female 57 yr old for a 100K life policy with a LTC rider that pays 4% of the DB. It cost about $150 a month. That would give her 4K per month for 25 months if she enters the nursing home. If she doesn't then her hiers get 100k. I am sure LTC is a little cheaper than that but if you don't use it then you have wasted your money. THis lady is already paying $60 per month for a 45K UL policy. She could drop that if she gets this.
I guess it is easier for me to sell that than an actually LTC because it takes care of the most common objection.....I will never go in to a nursing home so why waste the money. Here the money is not wasted.
It is better to use the single premium but some people don't have it. Also, I was not saying that medicaid treatment was not different, I was just wondering how different it was.
One of those things about making money is having to give it back tenfold if you do something wrong. I really try to avoid situations or advice that will come back and bite me in the ass.
I did a quote for a female 57 yr old for a 100K life policy with a LTC rider that pays 4% of the DB. It cost about $150 a month. That would give her 4K per month for 25 months if she enters the nursing home. If she doesn't then her hiers get 100k. I am sure LTC is a little cheaper than that but if you don't use it then you have wasted your money. THis lady is already paying $60 per month for a 45K UL policy. She could drop that if she gets this.
I guess it is easier for me to sell that than an actually LTC because it takes care of the most common objection.....I will never go in to a nursing home so why waste the money. Here the money is not wasted.
It is better to use the single premium but some people don't have it. Also, I was not saying that medicaid treatment was not different, I was just wondering how different it was.
In twenty or thirty years just what is that 4 grand gonna buy her? Nothing or very little, bad advice you are thinking about dishing out.
In twenty or thirty years just what is that 4 grand gonna buy her? Nothing or very little, bad advice you are thinking about dishing out.
Agreed. $4,000 per month would not get you better than Medicaid treatment today. And if this lady goes in a Nursing Home at age 85 the average cost for a decent nursing home could likely be $10,000 or more monthly.
You definitely have to have inflation protection on Long Term Care Insurance or else you are just doing them poor service.
It's not horseshoes - close doesn't count. If good nursing home care is $60,000 a year and you only have $35,000 you might as well have nothing.
This is my problem with a lot of LTC policies offering what I consider to be ridiculous benefits like $50 a day or even $100 a day. It's the difference between getting hit by a bus or a truck. Unless your family is able to pony up the remaining funds you're better off with nothing.
The ultimate absurdity would be a $100 a day benefit - but fixed. So not only is it worthless now, it's flat out garbage 20 years from now.
A: Have a $200 a day benefit that adjusts for inflation
B: Have family that can supplement the shortage
I don't see why LTC should even be written. We constantly bash health plans like Right Start for offering little protection. These LTC policies that don't actually cover LTC are the "Right Start" of long term care.
------------------------------------ Health Insurance Agents: Training, Support, Discounts, E&O for $440 www.ihiaa.com
Last edited by healthagent : 07-30-2007 at 08:02 AM.
I guess it is easier for me to sell that than an actually LTC because it takes care of the most common objection.....I will never go in to a nursing home so why waste the money. Here the money is not wasted.
.
Most modern agents working with a modern LTC plan promote LTC as a way to keep you from going to a nursing home by providing expansive options for home health care. Do the insurance/LTC hyrbrid plans provide for home health care as well once the client has qualified based on ADL's or are they just old style nursing home plans where you are either in a nursing home or you are not. I don't know. I am asking.
[quote=healthagent;27517]
This is my problem with a lot of LTC policies offering what I consider to be ridiculous benefits like $50 a day or even $100 a day. It's the difference between getting hit by a bus or a truck. Unless your family is able to pony up the remaining funds you're better off with nothing.
The ultimate absurdity would be a $100 a day benefit - but fixed. So not only is it worthless now, it's flat out garbage 20 years from now.
I don't see why LTC should even be written. We constantly bash health plans like Right Start for offering little protection. These LTC policies that don't actually cover LTC are the "Right Start" of long term care.[/quote
I don't follow your thinking here. All of the major LTC carriers (Genworth, Prudential, Mutual of Omaha, Allianz,Metlife, John Hancock, whatever) have benefits that are adjustable based on the agents suitability analysis and affordability just like any other type of insurance. If the client needed 400,000 in life insurance and the agent sold them 50,000 then that is not an inherent flaw in life insurance plans. Same with health insurance. Those are agent issues.
To say "I don't see why LTC should even be written" indicates that you have very limited familiarity with how they can and are benefitting clients. An unsuitable, misrepresented plan is ugly in any line of insurance and the problems of selling too small an amount of coverage and leaving the client thinking that they are better off than they are is as solidly a health insurance issue as LTC. Many people dont see why health insurance should even be sold because they have had some shlocky plan sold to them by some shlocky agent. Both they and the agents need to tie into what good products look like when sold in a professional type of manner. Same with LTCi. LTC is not for everyone but it most definitely is worthy of consideration by most.
My point remains. We bash health plans like Right Start. Why - they're cheaper and more affordable then comprehensive coverage, right? But they still result in huge financial hardships when a major claim is filed. Why do we Bash Mega and UA policies - they are much cheaper then major med.
Likewise with any LTC policy that would not cover the actual costs of nursing home is wasted money unless the family can supplement the expenses. Don't get me wrong, if the actual costs of LTC is $70,000 a year, they have $30,000 a year coming in from the policy then the family benefits greatly since they only have to cover the gap.
However, in cases where there's no other financial help available I see no need for any LTC policy that doesn't cover actual charges.
You can give me $100 and say "fly anywhere in the world" but I won't get far.
I'm also not sure I see your point relating to life insurance. If I sell a $50,000 benefit to someone with a $300,000 mortgage - husband works, wife at home with 3 kids, then you've just delayed her filing BK by a few months.
This is the way I see it, and I could be wrong (just ask my ex-wife):
Knowing that you are helping someone hide assets to qualify for Medicaid would be the same as helping them hide income on a tax return. I would not want to be there for the audit. So, I would not participate in that.
When talking about LTC insurance, I like to use auto insurance as examples. Everyone has it or has had it in the past.
If I do not use it I loose it.
The same can be said about auto insurance. You may never get into an accident, but you do not know. You need to look at your family history when looking at the need. If all your relatives lived along time, then LTC is something to consider.
Life insurance with LTC rider
While it provides some coverage, it may not provide all the benefits you need. Look at auto insurance liability vs. full coverage. Liability will help you in some cases, but not all. You are assuming more risk if you choose less coverage.
Mind you, my specialty is senior health and life products. I have talked to people about LTC, but most have had issues where a policy would not issue. So, that is when the life with LTC rider comes into play. Liability insurance is better then no insurance at all.
------------------------------------
"Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it." Ronald Reagan
Would you be helping out a health insurance client who didn't have much money by recommending they use the address of a relative who lives in a cheaper zip code or state?
The product I am talking about is through John H. I can see the points about 100k not being enough LTC for a 57 yr old if she doesn't use it till 85. The benefits trigger the same as a LTC policy and you can use the money for HHC. I am sure that is what most people wil use it for also. I normally do not deal with people this young. The reason I have the product is for seniors who have around 100k or more in CDs or something that is just there to pass on. This product will more than ouble an 75 yr olds money and give them LTC. Its alos easier to get than LTC.
Well, back to the original argument. If you end up being the advisor who got the client in trouble with the spenddown department, better watch out. I imagine it will be similar to what happens when CPAs go bad. They start with the one client, then they open up all your other client files. Good luck explaining that!
The product I am talking about is through John H. I can see the points about 100k not being enough LTC for a 57 yr old if she doesn't use it till 85. The benefits trigger the same as a LTC policy and you can use the money for HHC. I am sure that is what most people wil use it for also. I normally do not deal with people this young. The reason I have the product is for seniors who have around 100k or more in CDs or something that is just there to pass on. This product will more than ouble an 75 yr olds money and give them LTC. Its alos easier to get than LTC.
How does John H compare with Lincoln National. Don't they have a similar product?
I have never looked at Lincoln National. The only thing I don't like bout John H is that the cash value in the policy is shot to hell but thts how they get the death benefit so big.
Hiding Assets. Whats your view?
Linear Mode
