“Planning & Paying for Long-Term Care”

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Our Goal for Today

• Frame the cost and impact of Long-Term Care planning

• Uncovering Options to Pay For Long-Term Care

– Life Insurance

– Veterans Benefits

– Long-Term Care Insurance

– Other Third-Party Payors

Presented by:

Patricia Servaes Founder of Elder Resource Benefits Consulting

Don Poole Co-Founder and Chief Marketing Officer Life Care Funding, LLC

Matt Murphy President Financial Health Services, LLC

What is Long Term Care?

Long-term care is a range of services and supports you may need to meet your personal care needs. Most long-term care is not medical care, but rather assistance with the basic personal tasks of everyday life, sometimes called Activities of Daily Living (ADLs), such as: Bathing Dressing Using the toilet Transferring (to or from bed or chair) Caring for incontinence Eating

70 percent of people over the age of 65 will need long term care services at some point in their lifetime http://longtermcare.gov/the-basics/what-is-long-term-care/

Cost of Long Term Care

• Cost can easily be the single largest lifetime expense of an individual

• Tool: www.genworth.com/costofcare

Impact of LTC on Care Recipient

Genworth Cost of Care Survey 2013 – ‘Beyond Dollars’ - The True Impact of Long Term Caring Report.

• 88% of Care Recipients said their household income was reduced by an average 34% due to their long term care event

• 63% Reduced their savings by an average 61%

• 49% Of care recipients had never considered the possibility of needing long term care

Impact of LTC on Primary Caregiver

Genworth Cost of Care Survey 2013 – ‘Beyond Dollars’ - The True Impact of Long Term Caring Report.

• 83% of Primary Caregivers Contributed financially to their loved-ones long term care — an average $8,800 for out-of-pocket care expenses (excludes cost of facility care)

• 42% of Primary Caregivers reported the care recipient lived in their home for 3 or

more years

• 63% of Primary Caregivers reported lost income — an average of 23% of household

income

Beyond the Dollars

“My wife had to be available 24/7. She also became

my chauffeur and needed to help me shower and

dress — to help me move at all, really. It impacted

her freedom and her lifestyle.”

“Anger at my sister and Brother for not helping more

with our mom... Stress with my Husband over how much of ‘our

personal time’ taking care of mom is taking up from our own lives.”

Paying for Long Term Care

• ‘Long term care can be expensive — and, typically, it's an out-of-pocket expense.’

• ‘The more you know about the options, however, the better choices you can make.’

http://www.mayoclinic.com/health/long-term-care

Featured Speaker

Don Poole Co-Founder and Chief Marketing Officer Life Care Funding, LLC

www.lifecarefunding.com

(888) 670-7773

Life Care Funding

Allows Seniors to Convert a

Life Insurance Policy into a Life

Care Benefit Plan which is paid

directly to the care provider of

their choice.

-Private Duty Home Care

-Home Health Care

-Assisted Living

-Independent Living

-Skilled Nursing

-Related Services

According to Conning & Company:

"There are 150 million life

insurance policies in-force in the

United States of which senior

citizens own up to $500 Billion

worth of policies.”

88% of all policies issued will lapse

or be surrendered for little or no

value.

According to a 2007 GAO study:

38% of Medicaid applicants owned a

life insurance policy that needed to be

liquidated to qualify.

A Life Insurance Policy is legally

protected as personal property by

the US Supreme Court and the

policy holder has the guaranteed

right to use it to pay for Senior

Care.

“A Life Insurance Policy is

personal property just like a

home or stocks.”

Supreme Court case Grigsby v. Russell

(1911)

-Justice Oliver Wendell Holmes

Life Insurance needs are

based on Insurable Interest

Q: What was the Insurable

Interest you were trying to

protect when you bought

your Life Insurance Policy?

A: If a policy owner needs in

home care and no longer

needs or can not afford their

Life Insurance Policy, then

converting it to pay for Senior

Living should be considered.

Seniors have few options if they

do not need or can no longer

afford their Life Insurance

Policies:

- Continue paying premiums, keep

policy in-force so beneficiaries

can collect Tax Free, Probate

Free Death Benefit.

- Surrender the Policy back to the

Life Insurance Company:

Average Cash Surrender Value

4-6% of face; well below the

potential present day value.

- Stop paying premiums, Lapse or

Abandon the Life Insurance

Policy for No Value.

Key Components:

•Preserves Death Benefit over the

course of the spend down period

•Balance of Benefit paid to family if

senior dies before payout period

•Funds paid to care provider

through an FDIC Insured,

Irrevocable Benefit Account

•Keeps people off Medicaid,

Qualified Medicaid Spend-Down of

unprotected asset

•Any type/size Life Insurance

policies

•No cost or obligation to apply

•30 to 45 days to qualify

Life Care Funding Allows Seniors to Convert a Life

Insurance Policy into a Life Care Benefit

Plan which is paid directly to the care

provider of their choice.

Life Care Benefit Enrollment

Example #1

Case Study: 14793181H

Policy owner: 70 Male

Policy value: $250,000 (term)

Lapse Value: $0

Cash Value: $0

Life Care Benefit: $150,000 or

60% of death benefit

Case Study: 27785691A

Policy owner: 73 Female

Policy value: $100,000 (UL)

Lapse Value: $0

Cash Value: $0

Life Care Benefit: $35,000

or 35% of death benefit

Life Care Benefit Enrollment

Example #2

Seniors and their

families need to know

that if they own a Life

Insurance Policy they

can use it pay for

Private Duty Home

Care.

Policy Conversion Bills Based on Life Care Funding Program

Introduced to Legislatures as of September, 2013:

CA- SB 214

NY- A 7952

FL- HB 535

NJ- A 4168

KY- HB 314

LA- HB 545

ME- LD 1092

Legislative Activity to Educate and Inform

Texas HB2383

Signed into Law by

Gov. Rick Perry

June 14, 2013

Bills grant authority to the state Medicaid Departments to

educate citizens about the option to convert a life

insurance policy into a specifically configured Long Term

Care Benefit Plan as part of a Medicaid spend-down.

• Consumer: Use an asset they own and paid for over years

of premium payments to fund their Senior Care by

converting it into a Life Care Benefit Plan to help them stay

safely and comfortably in their homes, while preserving a

portion of the death benefit for the family.

• Senior Care Provider: Private Duty Home Care service

provider receives private pay funding for services over a

guaranteed time frame without disruption. (Increase

Revenue)

• Tax Payers: Keeps people private pay and off Medicaid.

Qualified spend-down of Life Insurance Policy to keep a

person private pay and delay entry onto Medicaid

generating considerable savings for tax payers.

Who Benefits and How?

It’s all about Options:

Educating Seniors and

their families about

how they can convert

their Life Insurance

Policy Death Benefit

into a Living Benefit to

remain safely and

comfortably in their

Homes.

www.lifecarefunding.com

(888) 670-7773

Featured Speaker:

Patricia Servaes Founder of Elder Resource Benefits Consulting

27 Confidential

Bringing the VA Benefit Home

Elder Resource Benefits Consulting is not a Veterans Services Organization

and is not affiliated with the VA

Veterans Administration - Aid & Attendance Pension

to assist wartime veterans and their surviving

spouses who:

Require the Aid & Attendance of another person to

assist with aspects of daily living.

As of November 2012

9 Million Veterans are over age 65 –

and this does not include their

Surviving Spouses This tax free benefit has been available since the early 1950s.

OVERVIEW

28

THE MAXIMUM AWARD FOR 2013

A Surviving Spouse can receive up to

$1,113 per month

A Veteran can receive up to $1,732 per

month

A Veteran with a Spouse can receive up

to $2,054 per month

Well Veteran with an ill Spouse can

receive up to $1,360 per month

Once the applicant meets the disability criteria for A&A, the actual amount of the

original award is determined by their Monthly Financial Means Test 29

WHO IS A WARTIME VETERAN? To be considered a War Time Veteran, The Veteran needs to

have Served at least One Day during a Period of War

Periods of war for this benefit are:

World War II – Dec. 7, 1941, thru Dec. 31, 1946. Min 90 days active service

Korean War - June 27,1950, thru January 31,1955 Min 90 days active service

Vietnam War – Min 90 days active service

From Feb. 28, 1961 thru Aug.4, 1964 – only if

“in-country” of Vietnam

August 5, 1964, and ending on May 7, 1975 –

no matter where in the world you served

Persian Gulf War - August 2, 1990, through date to Min 2 years active service

be prescribed by Presidential proclamation or law – should be soon!

30

WHO IS A SURVIVING SPOUSE? Someone who was married to

the Veteran at the time of his death

What if the person was married to a veteran, he died

and she remarried a non-veteran or divorced a

veteran?

31

MEDICAL REQUIREMENT

You must need the assistance of

another person with

Activities of Daily Living

32

THE INCOME TEST

What is Income?

Income, for the most part, is everything most of us

think of as income –

So do we all agree we know what

income is? 33

Well That’s Not It !

Income For VA Purposes:

Income MINUS

Regularly Occurring, Unreimbursed

Medical Expenses

as long as you meet the Criteria for Aid and

Attendance 34

THE INCOME TEST - EXAMPLE

$3,000 Income per month

$4,000 per month – HC cost

$-1,000 income for VA Purposes

- If your Income for VA purposes is $0 or Negative, there

is potential for the full Monthly Amount

- If the HC Cost is $2,000 your VA income is $1,000,

Subtract the $1,000 from the maximum award for an

approximate VA benefit

35

AGING IN PLACE

If our Applicant had $25,000 in assets & $1,000 in

additional monthly expenses - they would be out of

assets in 12.5 months or 1.04 years – but with the

benefit there assets would last:

2.35 years for the Surviving Spouse

3.26 years for the Well Vet ill Spouse

7.80 years for the Single Veteran

And we would have positive cash flow

for our married Veteran

36

THE ASSET TEST The Asset Limit is determined by each individual’s

situation

The largest amount of assets that an individual had

in their own name that ERBC successfully helped get

the award was $248,000 – but that is a rarity!

Most people seem to be able to be between $120,000

to $150,000 – although some can only have much

less

The important thing to remember is this is not a Yes or

No Award, it is If and When.

37

MYTH BUSTERS Do you know…

…that there is no $80,000 asset limit?

…that when a veteran or spouse is in a nursing home

on Medicaid the non-Medicaid spouse may still get

the full benefit at Home?

…that a veteran living at home whose wife is receiving

Home Care may still qualify for $1,360 per month?

Thanks to ERBC, Now You Do! 38

Matt Murphy President, Financial Health Services, LLC

Featured Speaker:

Our Mission

Financial Health Services (“FHS”)

helps seniors

pay for long term care.

25+ years providing services in the non-medical home care

900+ current clients (care recipients)

150+ third party payor relationships

100+ non-medical home care providers

20+ employees HQ in Plymouth Meeting, PA

About Us

Overview

Third Party Payor Services

Expertise Works with all types of third party payors

e.g. long term care insurance, government, non-profit, hospice

Administrative convenience Allows care recipients and care providers to focus exclusively on care

Cash flow benefit to your clients No to little out of pocket impact Fees paid by third party payor

Ensures regulatory compliance

Easy Pay

Offers Administrative Convenience

Overcome the 2-check objection Mitigate collection risk

FHS accepts most forms of payment

i.e., ACH, Visa, MC, Check

Economics

5% of the sum of caregiver fee + the office fee

• Long Term Care Planning affects the entire family

• The cost of Long-Term Care is high

Key Takeaways