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NAIC Partnership Update 2009. Agenda. DRA 2005 & Impact Partnership defined NAIC / Partnership Training state requirements training solutions. DRA 2005. Known for Medicaid eligibility changes Opened Partnership Programs to all states Requires new LTC agent training mandates.
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NAIC Partnership Update 2009 CLTC Partnership Training
Agenda DRA 2005 & Impact Partnership defined NAIC / Partnership Training state requirements training solutions CLTC Partnership Training
DRA 2005 Known for Medicaid eligibility changes Opened Partnership Programs to all states Requires new LTC agent training mandates CLTC Partnership Training
The Deficit Reduction Act of 2005 and its impact on Medicaid planning
The basics… • The look-back period has been increased from 3 to 5 years. • The start of the penalty for gifts made during the preceding 5 years begins on the date of application for benefits: there is no “credit” for the penalty which, under the old law started on the date the gift was made. • The use of Medicaid friendly annuities is still allowed but the state must be named the beneficiary.
Continued… • The state can deny eligibility if a home has more than either $500,000 or $750,000 in equity. • Entrance fees in CCRC’s may have to be spent on nursing home care before Medicaid will pay. • States can now receive Medicaid waiver to establish partnership programs
Winners The state. Nursing homes. Long-term care insurance: If people want to protect assets they have to anticipate they will need nursing home care at least 5 years before they actually go in. That is next to impossible to determine. Reverse mortgage companies: The family may decide to keep the person home longer and pay for it by taking equity out of the house. Assisted living facilities: An ALF is cheaper than a nursing home. Losers Medicaid planning attorneys. With a 3 year look-back they can likely make a fee by telling the family of an institutionalized loved one that they only have to pay for this period. A 5 year look-back basically bankrupts the family. A Medicaid plan i.e. gifting assets must not take place 5 years before applying for benefits. It is unlikely the family will dispose of assets. Increasing the look-back period
Winners The state Nursing homes: No more half-a-loaf equals more private pay. Long-term care insurance: It is now very difficult to protect assets if a person is near to or actually in a facility. There is a strong incentive to purchase the product likely now supported by elder law attorneys. Losers Medicaid planning attorneys: a significant source of revenue was half-a-loaf. It’s now dead. Changing the start of the penalty period
Winners The state. See a trend here? Nursing homes: In theory there should be more private pay patients. (See “Losers”. Long-term care insurance: Promoters of these schemes regularly bad mouthed the product. Less Medicaid planning options = more LTCi if sold correctly. Losers Nursing homes: Making the state the beneficiary of the annuity does not help the facility; They still get the Medicaid rate. Medicaid planning attorneys & annuity sales reps: annuities become less attractive if the state is the beneficiary Medicaid friendly annuities
Winners The state. Nursing homes. Home equity conversion companies: The applicant will be forced to take money out of the house to reduce the equity to either $500,000 or $750,000 depending on the state LTCI Losers Families: They can’t hide assets in a home anymore. Medicaid planning attorneys: Another significant source of fees is eliminated. Real estate brokers. No house means no commission. No eligibility based on equity
Winners The state. CCRC’s: They can receive a private pay rate until the entrance fee is spent. See also “Losers: LTCi. Losers Children: No more inheritance. Medicaid planning lawyers: Although not used often purchasing a CCRC’s was a way to shelter large amounts of money. Entrance fees in CCRC’s
Winners The states Facilities and companies that provide long-term care services. Families: LTCi protects the family not the individual and protects lifestyle. Both are devastated when Medicaid planning is employed. Losers Individuals with substantial monthly income; partnership plans do not protect income Partnership
Long Term Care Partnership Plans • DRA’05 repealed the “Waxman Amendment” that mandated estate recovery. This undermined the core purpose of partnership. • States now routinely receive the necessary waiver to establish partnership programs
WHO ARE THE PARTNERS & WINNERS? • State • It prevents those with assets from hiring Medicaid planning attorneys to help them transfer assets and becoming Medicaid eligible from day one • Consumer • Gives consumers strong incentives not to get rid of their assets by offering protection if they purchase LTCi • Insurer/Agent • State sponsorship & promotion translates into Increased production
WHO PAYS NOW? State governors’ concerns today focus on rising Medicaid costs • Medicaid: 49 % • Medicare: 20 % • Out-of-pocket: 18 % • Private LTC insurance: 8 % • Other: 5 % * Source: CMS, Georgetown Univ. 2007 PIE Charts
How Partnership works… • Consumer buys private LTCI with a total benefit value of $250,000 • Consumer needs care • Consumer uses LTCI first • If they exhaust $250,000 and apply for Medicaid the program will disregard the first $250,000
Example of Asset Disregard Partnership Policy Assets Plan Payout Medicaid Spend Down Example 1 $ 50,000 $ 50,000 $0 Example 2 $ 200,000 $200,000 $0 Example 3 $1,000,000 $500,000 $500,000 Non-Partnership Policy Example 4 $200,000 $0 $200,000
INFLATION SPECIFICS • Age 60 and under: • Some form of compound inflation protection must be included • Age 61 – 75: • Some form of inflation protection must be included • Age 76 +: • Must offer inflation protection • (but is not required for application)
Partnership - NAIC Model Rules • Producers must complete this new training in order to sell LTC insurance • Even if already licensed in a Partnership plans state • Regardless of representing a Partnership policy CLTC Partnership Training
NAIC Model Rules • The one-time training required shall be no less than eight (8) hours and • Ongoing training shall be no less than four (4) hours every 24 months CLTC Partnership Training
States may modify these rules… • Each state has the right to adopt or modify the NAIC Model Regulation • Which creates normal chaos associated with a national program regulated by 50 Departments of Insurance CLTC Partnership Training
Critical Issues • Interpretation of each state’s regulations • Understanding the options available to meet the training requirements • Having multiple training solutions • Answers: www.ClearCert.com CLTC Partnership Training
What’s the training solution?CLTC Partnership Trainingwww.CLTCPartnershipTraining.com CLTC Partnership Training
Objectives • To develop and offer multiple training options that satisfy the state specific regulations that are: • Simple • Quick • Effective • To educate producers how to: • Present the subject of long-term care planning • Establish a plan for long-term care • Fund it, when appropriate, with LTCi
Classroom 8 hours Sign in/out No Exam Recorded 7-14 days Correspondence Course/ On-line Exam triggers CE Proctor/Affidavit Recorded 24 hours Continuing Education CLTC Partnership Training
Training Options: Classroom • 8 hrs CE : entire CLTC/Partnership course or • 2 hrs Accelerated Prep Review (No CE) • Prepares for On-Line course with Exam CLTC Partnership Training
Training Options: Correspondence On-Line course with exam • State specific material included • 8 hours CE from passing exam CLTC Partnership Training
Questions? www.CLTCPartnershipTraining.com Gene Pressley 803-283-4620 Gpressley@CLTCPartnershipTraining.com 9/14/2014 CLTC Partnership Training 29