LTCI Partners

1
The Deficit Reduction Acts Impact on National
LTC Partnership Plans
2
Agenda

• History of DRA
• DRA and LTCI
• Key Benefits of Partnership
• Example of Partnership Protections
• DRA Also
• Implementation of the National LTC Partnership

3
History of the Deficit Reduction

• February 1, 2006 Congress passed DRA of 2005
• February 8, 2006 President Bush signed DRA into
  law

4
DRA and LTCI

• 3 sections in DRA affect LTCI
• Most notable promotes and allows the expansion of
  LTC Partnership programs from the original 4 to
  all 50 states

5
Key Benefits of Partnerships

• LTC Partnership combines private LTCI and
  Medicaid
• Retains larger portion of his/her assets above
  the amounts usually allowed by Medicaid
• Protection is dollar-for-dollar in conjunction
  with amount paid by the LTC Partnership policy

6
Example of Partnership Protection

• Single person with no partnership
• State requires spend down to 3,000 before
  Medicaid covers LTC services
• Single person with LTCI policy providing 200,000
  in benefits
• After receiving LTC services under terms of
  policy and obtaining 200,000 in benefits, would
  be covered by Medicaid and keep 203,000 of assets

7
DRA Also

• Grandfathers 4 existing Partnership programs in
  California, Connecticut, New York and Indiana
• Provides guidance and uniform requirements
• Offers reciprocity between states
• Allows state exemption from reciprocal Medicaid
  asset protection

8
Implementation of the National LTC Partnership

• To participate state must amends Medicaid plan
• Partnership program can start first day of the
  first calendar quarter in which the states
  Medicaid plan is amended
• Insurers receive Department of Insurance approval
  for new policy language regarding dollar-for
  dollar- Medicaid asset protection
• Uniformity of requirements for National LTC
  Partnership policies should facilitate the process

9
The National LTC Partnership policy or
certificate must

• Be a Tax-Qualified LTC policy/certificate
• Meet requirements of NAIC Model Act and LTCI
  Regulation
• Be issued after the states amends on its Medicaid
  plan
• Meet specific states requirements for
  Tax-Qualified LTC policies, however, state cannot
  impose any requirements other than what it
  imposes on non-Partnership LTCI policies
• Provide compound inflation protection for
  applications ages 60 and younger
• Provide some form of inflation protection for
  applications ages 61 through 75
• Produce reports to Secretary of Health and Human
  Services

10
LTCI Partnership Training

• All LTCI agents receive 8 hours of Partnership
  training initially and 4 hours CE every 24 months
• All agents selling LTCI must be trained within a
  year after state establishes a Partnership
  program
• Insurance companies issuing Partnership policies
  must require selling agents to verify training

11
Sales and Marketing

• Sales Practices Insurer and its agents mst
  comply with training requirements to prevent
  abusive practices that could harm consumers
• Advertising Insurer must submit any LTCI
  advertisement to state commissioner for review or
  approval, as required by state law
• Suitability Insurer must assist application in
  determining whether purchase of LTCI is
  appropriate based financial situation and
  preference
• Thirty-day free look Policy must include the
  30-day free look period typical in LTCI policies

12
Exchanging LTCI policies purchased prior to DRA

• DRA does permit insurance companies to exchange
  existing non-Partnership policies for National
  LTC Partnership policies
• However, each insurance company must review its
  block of LTC insurance business to determine if
  or how it will implement an exchange program
• Insurers can simply issue an endorsement or rider
  to an existing policy stating it has partnership
  status, or require insureds to lapse their
  existing policy and purchase a new one

13
3 Other Sections of DRA Restrict Medicaid Access

• These restrictions include
• Look back period for transfer of assets to an
  individual will be extended from 3 years to 5
  years
• New Medicaid cap on home equity exemption of
  500,000 with allowance for individual states to
  increase that cap to 750,000
• A limitation on the use of certain annuities to
  shield assets from Medicaid
• These and other new Medicaid restrictions will
  not apply restrictions will not apply
  retroactively but will take effect on the date
  this legislation is enacted.

14
More on DRAs Impact on LTCI

• Act provides 15 Million in funding over 5 years
  for National Clearinghouse for LTC Information
• Purpose of new initiative is to promote consumer
  education regarding the National LTC Partnership
  Program, Medicare, Medicaid and LTCI
• Both new restrictions on Medicaid asset transfer
  and new National Clearinghouse for LTC
  Information direct consumers towards LTCI as
  viable option to provide financial protection
  from LTC expenses
• The passage of this historic legislation sends
  message to public - - federal government is not
  going to provide taxpayer-funded LTC to all
  Americans encourage personal responsibility to
  plan for financing LTC needs

15
Need more information?

• If you have any questions or need additional
  information, please
• Call me at [phone] ext. 111 or
• Email tom.rieksejr_at_ltcipartners.com
• Thank for your time today.Tom