long term care planning for veterans and medicaid benefits by: randy “positive” alexander
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Long Term Care Planning For Veterans and Medicaid Benefits By: Randy “Positive” Alexander. Unprecedented Opportunity For Insurance Agents In 2011. What Is Long Term Care?. Long term care is provided to those individuals who cannot independently meet their daily needs. - PowerPoint PPT PresentationTRANSCRIPT
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Long Term Care Planning For Veterans and Medicaid
Benefits By: Randy “Positive” Alexander
Unprecedented Opportunity For Insurance Agents In 2011
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What Is Long Term Care?• Long term care is provided to those
individuals who cannot independently meet their daily needs
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Where Is Long Term Care Offered?
• Long term care can be provided at home, an assisted living facility, or nursing home.
.• Wherever long term care is provided, it
can be very expensive.
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Clients Are Motivated To Act • Clients who are paying for long term care
services are motivated to take action!
• What do they need?
• A financial advisor/insurance agent who understands the government entitlement programs – Medicare, Medicaid, and VA.
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How Does One Pay for Long Term Care?
• Long Term Care Insurance• Life Savings• Reverse Mortgage• Veterans Benefit - “Aid and Attendance”• Medicaid
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What Is The VA Benefit – Aid and Attendance?
• It is a monthly pension check that is available to a qualified veteran, or the surviving spouse of a qualified veteran, who is paying for long term care.
• To qualify, the party must have limited assets and income.
• Once qualified, the VA sends a monthly pension check directly to the party.
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What A&A Benefits Are Available?
• Single Veteran - $1,644 per month• Married Veteran - $1,949 per month• Surviving Spouse - $1,056 per month
• These amounts are maximums.
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What Is A Qualified Veteran?
• The qualified veteran is someone who served 90 days or more of active duty, with at least one day during an active wartime, and received a favorable discharge – other than dishonorable.
• The best way to determine if a veteran is “qualified” is to review a copy of his or her DD-214 – military discharge paper.
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Qualified Veteran – What Next?• Once your case involves a qualified veteran –
deceased or living, the next step is to determine if there are limited assets and income.
• Other than a house, car, traditional furniture and personal property, and a prepaid funeral, the party (either a living veteran or surviving spouse of a deceased veteran) applying for the A&A benefit can have approximately $80,000 of cash or other assets.
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What Is The Prescribed Income Limit?
• The “prescribed income limit” or PIL is equal to the veteran’s unreimbursed monthly medical expenses - reoccurring.
• For example, if a veteran is residing in an assisted living facility and pays $3,500 per month for his care and also pays $500 per month for prescription drugs, his prescribed income limit is $4,000.
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Planning Strategy 1 - Gifting• If a veteran has more than $80,000 in
countable assets, he should consider giving away the excess.
– Note: With the VA program, a Veteran can be rich today, poor tomorrow, and qualify for the A&A benefit.
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Planning Strategy 1 - Problems• If the veteran is going to need Medicaid
benefits within the next 60 months, the gift will cause an eligibility problem.
• If the veteran gives away assets to his children, he will lose control of those assets – sometimes forever: divorce, bankruptcy, death.
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Planning Strategy 2 – Life Insurance
• If a veteran has more than $80,000 in countable assets, he should consider investing the excess into a life insurance policy.
– Note: A life insurance policy will be treated as a countable resource to the extent of its cash value.
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Large Savings Analysis
• What would you do if the veteran has a savings account valued at $400,000?
• I would make sure that he has a funeral plan and estate plan, that all outstanding bills are paid, and he retains $80,000. Assuming that $320,000 remains, I would suggest purchasing an immediate annuity and life insurance.
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Immediate Annuity & Life Insurance• I would suggest the veteran purchase an
immediate annuity that pays him $2,000 per month for a period of 77 months. The cost of the immediate annuity is $154,000.– Assuming the veteran is 83 years of age, his
Medicaid life expectancy is 6.49 years/77.88 months.
• With the remaining $166,000 I suggest the veteran purchase a Phoenix LegacyShield life insurance policy.
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Economic Result• PIL $4,000
• Social Security/Pension: $2,000• Immediate Annuity: $2,000• A&A Monthly Benefit: $1,644• Total Monthly Cash Flow: $5,644• Beneficiary's receive $166,000 tax free
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Conclusion
By expanding your practice to include VA planning, you gain the opportunity to meet clients who are in need. When you can show a client how to pay for long-term care by way of government entitlements (VA and Medicaid) without jeopardizing their financial well being, you will never find a happier client. Happy clients result in more referrals and sales!