Indiana LTC Partnership Program 7 Hours CE Credit

Indiana LTC Partnership Program7 Hours CE CreditInsurance Career Training, Inc.www.insurancecareertraining.com

1Understanding the Personal Umbrella PolicyYou may access this class presentation after class at www.insurancecareertraining.com/classhandouts

The file password is taurus282

2Understanding the Personal Umbrella PolicyLONG TERM CARE INSURANCE IN INDIANA

Planning for Your Long Term Care Needs

Good News We Are Living Longer Bad News We Are Living Longer 7 out of 10 individuals will need Home Health Care some time during their lives. Currently, 40% of those using long term care services in the U.S. are between the ages of 18 and 64. Overall, individuals living over the age of 65 will have a 60-70% chance of needing some type of long term care serviceAs a population, we are living longer because of healthier lifestyles, new medical technology, and drug treatments. These medical advances enable us to live with a mental or physical condition longer than ever before. A 65 year old individual today is expected to live well into his/her late 80s. Because we are aging and living longer, our ability to perform normal activities of daily living could be hindered due to a medical issue. Long term care services assist an individual with everyday activities such as eating, bathing, dressing, and mobility that are hindered because of a medical or mental condition.

The Indiana Long Term Care Insurance Program (ILTCIP) is an innovative working partnership between the State of Indiana and private long term care insurance companies. Indiana has taken the lead in helping its residents protect their hard-earned life savings from the high cost of long term care by promoting the awareness of long term care.

All long term care insurance policies available from insurance companies are not the same. Policies are approved by the Indiana Department of Insurance as meeting required state statutes. Partnership policies offer the consumer additional benefits for their long term care needs and protection for their savings. In addition, Partnership insurance policies qualify for a state tax deduction helping Hoosiers to protect even more of their savings.

INDIANA DEPARTMENT OF INSURANCE

INDIANA DOISupervises the organization, regulation, examination, rehabilitation, liquidation, and conservation of all insurance companies in Indiana; issues a certificate of authority to a company licensed to do business in IndianaEnforces, administers, and executes the insurance laws of IndianaRegulates insurance agent licensing requirementsINDIANA DOILTC LICENSING REQUIREMENTS:ResidentBe licensed to sell health insurance; ANDComplete an initial 8-hour basic long term care insurance courses; ANDComplete 5 hours of LTCI CE every 2 years to maintain eligibility to sell LTCIIf selling partnership policies, complete a one-time 7 hour IN Partnership specific course

STATE HEALTH INSURANCE ASSISTANCE PROGRAM (SHIP)

SHIP PROGRAMProvides free health insurance information for seniors and pre-retireesPart of a federal network of SHIP programs located in every stateIn Indiana, SHIP is sponsored by the Centers for Medicare and Medicaid Services

SHIP PROGRAMProvides educational materials and brochuresHelps explain the Medicare programEducates how to file Medicare claims and how to appeal Medicare decisionsExplains how to make informed decisions about health care policiesInforms a Medicare beneficiary or health insurance policyholder of their rights

SHIP PROGRAMShows how to evaluate the various prescriptions, Medicare supplement, and LTC insurances availableRefers to appropriate agencies for additional helpProvides a speaker for presentation to a group, club, or senior center

LONG TERM CARE INSURANCE IN INDIANA

LTC INSURANCE IN INDIANATwo categories of LTC insurance are approved by IDOI for sale in Indiana:Indiana Long Term Care Insurance Program policies (Partnership) andTraditional Long Term Care insurance policies

LTC INSURANCE IN INDIANAAsset ProtectionOnly LTC insurance policies approved under the Indiana LTC Insurance Program provide Medicaid Asset ProtectionTo identify if a LTC policy is a Partnership policy (qualifies for asset protection), special wording is on 1) Outline of Coverage, 2) application, and 3) front page of the policy

FAVORABLE TAX STATUS

FAVORABLE TAX STATUSIndiana residents who pay premiums for policies approved under the Indiana LTC Partnership Program can receive a state tax deductionA taxpayer may take this deduction only for premiums paid (during the tax year) for an Indiana Partnership policy for himself/herself, a spouse, or both taxpayer and spouseThe tax break is a deduction, not a creditFAVORABLE TAX STATUSFederalHIPAA of 1996 is a federal law providing limited federal tax breaks for owners of LTC policies that meet specific standards (tax-qualified)

FAVORABLE TAX STATUSTax Breaks ProvidedPremiumsPremiums for self-employedBenefits

FAVORABLE TAX STATUSQuestionsHow do I know if a policy is a federally tax-qualified LTC insurance policy?What are some of the features included in federally tax-qualified LTC policies?Benefit TriggersNon-Forfeiture BenefitRequired Consumer Protection StandardsINDIANA LONG TERM CARE INSURANCE PROGRAM (PARTNERSHIP)

HISTORY

HISTORYLegislative HistoryRobert Wood Johnson Foundation Planning GrantSteering Committee and Task ForceProgram DesignAttempts at Federal LegislationMedicaid State Plan Amendment SubmittedRobert Wood Johnson Foundation Implementation GrantPlan Amendment Approved Program ImplementationAmendmentsPROGRAM FEATURES

PROGRAM FEATURESOne Year PoliciesMinimum Daily BenefitPot of Dollars (or Pool)Inflation ProtectionPooled RiskComprehensive PoliciesCase ManagementInsured Event DeterminationTax-Qualified ILTCIP policiesNon-tax qualified ILTCIP policyPROGRAM FEATURESMeasuring cognitive impairment for ILTCIP policiesIssue Age30-Day Free LookStep-Down Coverage ProvisionContact DesigneeMinimum Reinstatement PeriodCoordination of BenefitsNo Policy Change Without AcceptanceAssisted Living Facility BenefitRidersDEFICIT REDUCTION ACT

DEFICIT REDUCTION ACTExpansionReciprocity for Medicaid Asset ProtectionMedicaid EligibilityASSET PROTECTION

ASSET PROTECTIONMedicaid Asset Protection is a special state-added benefit found only in LTC policies approved by the Indiana LTCIPThe Medicaid asset protection feature with a Partnership LTC policy provides additional financial protection if a policyholder applies for Medicaid eligibilityThe state has approval from the federal government to offer asset protection only, this program does not offer income protectionASSET PROTECTIONCombination Asset ProtectionTotal Asset ProtectionInitial PurchasesPolicy Effective DateWhy the Offer is ImportantBenefits UsedReduction of CoveragePolicies with Shared BenefitsGrowth of AssetsRECIPROCITY

RECIPROCITYQuestions Regarding ReciprocityWhat does this mean for Indiana Partnership policyholders?Does this change my Partnership policy if I remain in IndianaIf my Partnership policy was effective before April 1, 2009, am I covered under this reciprocity agreement?What requirements have to be met to qualify for asset protection in other states?Does this Reciprocity Agreement guarantee that I will have asset protection with other states in the future?MEDICAID ASSET PROTECTIONThere are two types of asset protection Total and Dollar-for-DollarTotal Asset Protection means all of your assets will be disregarded during the Medicaid eligibility process, should you choose to apply for help from Indiana MedicaidDollar-for-dollar asset protection means that you will be allowed to retain one dollar of your assets for every one dollar of benefits used in your Partnership policyFAQ

FAQWhy would I want to purchase a LTC policy?Doesnt Medicare pay for LTC services?What is the ILTCIP?Doesnt the State of Indiana sell policies under the Partnership program?What is the difference between a traditional LTC policy and a Partnership policy?What is asset protection?FAQDoes a Partnership policy cost more than a traditional LTC policyHow do I purchase a Partnership LTC Policy?How do I know if I have a Partnership policy?If my policy is not a Partnership policy, can I add asset protection?I bought a LTC policy after 1993, but my agent did not discuss a Partnership policy with me. Is this illegal?How much asset protection will my Indiana Partnership policy provide?FAQHow do I find out how much coverage is required for total asset protection?Is my income protected under an Indiana Partnership Policy?Is my LTC policy good if I move to another state?Can I take a tax deduction for my LTC policy?Since I have a Partnership LTC policy, am I automatically eligible for Medicaid?INSURANCE COMPANYTELEPHONE NUMBER*POLICY TYPESAM BEST MOODY'S STANDARD & POOR'SBankers Life and Casualty Co. 888-282-8252 TQ ComprehensiveTQ Facility-only B Baa3BB-Genworth Life Insurance Co. 800-456-7766 TQ Comprehensive (Individual/Group)TQ Facility-only A A1 AJohn Hancock Life Insurance Co. (U.S.A.) 800-377-7311 TQ ComprehensiveA++ Aa1AA+Massachusetts Mutual Insurance Co. 800-272-2216 TQ ComprehensiveTQ Facility-onlyA++ Aa1 AAAState Farm Mutual Automobile Insurance Co. 866-855-1212TQ Comprehensive A++ Not Rated AATransAmerica Life Insurance Co. 800-227-3740 TQ Comprehensive A+A1 AA-PARTICIPATING INSURERSINDIANA MEDICAID

GENERAL INFORMATIONMedicaid is a federal/state funded medical assistance program that pays for approved and needed medical care for persons who meet specific eligibility requirementsApplications for Medicaid assistance are taken at the County office of Family and Children

GENERAL INFORMATIONEligibility:Applications must be in one of the following categories:Low income families with dependent childrenPregnant womenNewborns (up to age 1 if born to Medicaid recipient)Age 65 or olderIndividuals age 18,19, 2012Children under 19 BlindRefugeesGENERAL INFORMATIONAnd Meet medical criteriaMeet the financial criteriaIncome (differs for individual or married couple)Countable assets (differs for individual or married couple)EXEMPT AND NON-EXEMPT ASSETS

EXEMPT AND NON-EXEMPT ASSETSExempt (not counted)Burial and Funeral TrustsHomeHousehold FurnishingsIncome-Producing PropertyLife InsurancePersonal EffectsReal Property in the sole name of the communitys spouseVehicleEXEMPT AND NON-EXEMPT ASSETSNon-Exempt (Counted)AnnuitiesCashCash Value of Life InsuranceCertificates of DepositIRAsSeries EE BondsMoney Market FundsMutual Fund SharesPension FundsReal PropertyStocks and BondsASSETS AND INCOME

ASSETS AND INCOMEAnnuitiesBank Accounts and Certificates of DepositIRAsLife Insurance with Cash ValueMutual FundsRetirement PlansStocks and Bonds

INCOMEWhat is Income?How is income treated in the eligibility determination process?Annuities and IRAs: how are payments treated?May I transfer income?LOOK BACK PERIOD

LOOK BACK PERIODMedicaid will look back 5 years from the time of application to determine whether the applicant transferred any assets for less than fair market value in order to be eligible for MedicaidA transfer for less than fair market value is an illegal transferCLOSING MEDICAID ELIGIBILITY LOOPHOLES

CLOSING MEDICAID ELIGIBILITY LOOPHOLESAnnuitiesTransfer of IncomeTransfer Penalty for InactionU.S. Savings Bonds DEFICIT REDUCTION ACT (DRA 2005)DEFICIT REDUCTION ACT (DRA 2005)Key Medicaid Asset ProvisionsPenalty period changesHardship waiverTreatment of annuitiesMandatory income-first ruleExcluded coverage for substantial home equityDEFICIT REDUCTION ACT (DRA 2005)Key Partnership ProvisionsExpansionReciprocity

MEDICAID ESTATE RECOVERYMEDICAID ESTATE RECOVERYMedicaid estate recovery is required by federal lawAssets subject to recovery all assets in the recipients probate estate are subject to recoveryAssets not subject to recovery proceeds of a life insurance policy, personal effects/keepsakes/ornaments of the deceased, assets protected by the use of an Indiana Partnership LTC policyFiling of a claimSPOUSAL IMPOVERISHMENT PROTECTION LAWSPOUSAL IMPOVERISHMENT PROTECTION LAWThe Spousal Impoverishment Protection Law allows the community spouse to keep some of the couples income and assets while still qualifying the nursing home spouse for MedicaidCASE STUDIESMEDICAID CASE STUDIESINCOME, ASSETS, SPOUSAL IMPOVERISHMENT

Can download current pdf of this from: http://www.in.gov/iltcp/2340.htm

RECIPROCITY CASE STUDIESOriginal Partnership States (IN, CA, NY, CT)Use the reciprocity map slide for these samples:1. A Bloomington, IN resident moves to San Diego, CA, with a full asset protection LTCIP policy. What can he/she expect if entering a nursing home in CA?a. Full asset protectionb. Dollar for dollar asset protectionc. Only benefit is standard policy benefits paidd. No benefits at all2. What if a CA resident moves to IN?

INDIANA LTC PARTNERSHIP CASE STUDIESDollar for Dollar scenario (most states): Harry and Sally have a total of $350,000 in assets including their home value of $150,000. Their priority is to protect each other. Adult kids are doing well. They are not particularly concerned with estate protection, but if a little is left for the grandkids, that would be nice. a. Show the couple that the home is exempt ($150,000) if the first spouse is in the nursing home and $113,610 (2013) is exempt for the at home spouse.$350,000 total assets-150,000 home$200,000 assets -100,000 (1/2 of countable assets)$100,000 is amount required spentPossible benefit choice of $190/day x 730 days (2 years) = $138,700 eachThis should provide good initial protection for the at-home spouse. If the first spouse dies, and then the second spouse needs care, then the home could become countable and the $100,000 spousal protection would be reduced to $1,500 for a single. But the asset protection of $138,700 PLUS the 5% compounded benefit increases over time, would probably be a nice something for the grandkids.[with 5% compound over 10-years = $225,928 of asset protection]Total Asset Protection (IN- only)a. Considering Harry and Sally again and they can afford full asset protection.

Solution is to exceed $291,050 benefit limit (i.e. combo of $200/day x 4 years = $292,000 or $267/day x 3 years = $292,365) for total asset protection. [with 5% compound over 10-years = $476,232 of total asset protection]

b. John and Mary have a $250,000 paid home, $300,000 IRA, and $350,000 in invested assets. They originally thought that with Social Security and pension incomes that they could personally afford to pay for any potential HHC or Nursing Care from their investment earnings. However, since the economy slumped and with investment portfolio only averaging around 5%, they realize that they will not be able to protect their assets from convalescent care. Total investments $650,000 x 5% = $32,500 annual investment income. At an average of $200 of daily care costs, their investment income would only cover 162 days of care.

Solution is to exceed $291,050 benefit limit (i.e. combo of $200/day x 4 years or $267/day x 3 years = $292,365) for total asset protection. [with 5% compound over 10-years = $476,232 of total asset protection]

TOTAL ASSET VERSUS DOLLAR FOR DOLLAR CASE STUDIESAsset Protection Case StudiesReduction of Coverage:In 1999, T.J. Foster bought an Indiana Partnership policy with an unlimited benefit. In 2003, Mr. Foster reduced his maximum benefit from unlimited to $180,000. The State-state dollar amount in 2003 was $178,679. Since his new maximum benefit is slightly more than the state-set dollar amount in effect when he made the reduction, his policy will provide total asset protection when the benefits have been exhausted paying for his careDollar for Dollar Asset PolicyBob initially purchased a $150,000 insurance Partnership policy that qualified as dollar for dollar asset protection. Over the years the policy benefits have increased to $174,000 due to the 5% inflation factor. Bob has been diagnosed with early Alzheimers disease and has need LTC services. His Partnership policy had paid out $174,000.Dollar for Dollar Asset PolicyBob continues to need care, but he (or his family) does not have the financial resources to pay for ongoing LTC services. Bob decides to apply for Medicaid assistance. When Medicaid evaluates Bobs eligibility, $174,000 of his countable assets will be disregarded because of his Partnership LTC policy (dollar for dollar). If Bobs assets are more than $174,000, he will have to spend-down to remain eligible for Medicaid assistance.Total Asset PolicySame scenario except Bob initially purchased a $240,000, Partnership policy that qualified as total asset protection. Over the years with 5% inflation protection, the policy benefits are now $278,000. If Bob still needs care after all of his policy benefits have been paid out and does not have the financial resources to pay for continued care, he may have to apply for Medicaid assistance. When Medicaid evaluates Bobs eligibility, all of his countable assets would be disregarded because of his total asset Partnership policyAGENT CE FAQsAgent CE FAQs

Q. What are the licensing requirements for a Resident agent to sell long term care?A. Producers must hold either an Accident & Health or Life, Accident & Health license to sell LTC insurance. Before marketing, selling, or soliciting any LTC products, all producers must: 1) Complete an 8 hour basic LTC course. The course may be self-study or online.2) After completing the initial 8 hour course, complete a minimum of 5 hours (one 5 hour course or combination of 5 hours) of continuing education in LTC in each renewal period. Courses can be self-study or online.3) Non-compliance with the 5 hour renewal requirement will require completion of the 8 hour basic LTC class again.Partnership1) To sell Indiana Partnership LTC policies, a producer must comply with the above and complete a 7 hour Partnership LTC course. This course is a one time course, in-classroom only.2) An annual 3 hour Seminar for Partners class is also offered as a refresher course on Partnership. (Not Required)Agent CE FAQs

Q. What are the licensing requirements for a Non-Resident agent to sell long term care?A. The basic 8 hour and 5 hour renewal requirements are waived for agents holding an IN non-resident health license if Indiana has licensing reciprocity with that state. The 7 hour IN Partnership CE requirement does apply to Non-Resident agents and is not waived.Q. Where can I find a record of my CE credits?A. An agent is required to keep copies of original CE certificates. The DOI does not keep copies of certificates. Insurance companies will request copies of LTC CE certificates when agents submit applications or are appointed. Starting January 1, 2007, CE providers were required to post CE courses completed on the SIRCON database. Click here to link to SIRCON database. Q. Will LTC CE credits count toward my CE requirements for my license?A. Yes.Q. Does another states Partnership CE course satisfy Indianas Partnership CE requirement?A. No. As one of the 4 original Partnership states, Indianas Partnership/Medicaid programs are different than other states. The IN Partnership continuing education course is specific to Indiana.AGENT LTC CAMPAIGNAgent LTC Campaign

PLANNING FOR YOUR FUTURE CAMPAIGN

The State of Indiana wants to encourage Hoosiers to plan for their future health care needs. Many consumers mistakenly believe Medicare will pay for expenses for extended long term care expenses. In Indiana, home health care can cost over $20,000 a year. Full-time care in a nursing facility can cost over $70,000 a year.A letter from the Governor will be sent to Hoosiers encouraging them to plan for long term care needs The consumer can return the reply card or call a toll-free number to receive more information and to be contacted by a qualified agent about long term care insurance policies.Agents who are licensed and LTC certified are eligible to participate in the campaign. Indiana residents have several policy options traditional and Partnership - if a long term care insurance policy is the right choice for them and their families. Agent registration is available at https://online.tlleadmanager2.com/ILTCIP. Indiana LTC Partnership Program7 Hours CE CreditInsurance Career Training, Inc.www.insurancecareertraining.com

88Understanding the Personal Umbrella Policy