Confidential & Proprietary Long-Term Care Insurance: An Emerging Employee Benefit Opportunity Ruth...

Confidential & Proprietary

Long-Term Care Insurance:An Emerging Employee Benefit Opportunity

Ruth LarkinPresident

LifeCycle Benefits2000 Wadsworth Blvd., #202Lakewood, CO 80214Office: 303-202-5058Mobile: [email protected]

AgendaAgenda

Establishing the need for Long-Term Care planning

Long-Term Care Insurance Overview

Overview of the CLASS Act

LifeCycle Benefits

Integrating LTC Insurance into the client stewardship process

Establish Next Steps

Copyright 2011 | LifeCycle Benefits | All Rights Reserved

Consider these facts:

70% of Americans over 65 will need LTC1

78 million Baby Boomers in the U.S. will start turning 65 in 20112

Average LTC claim lasts 2.5 years3

Average age when a claim starts is 824

Average cost of care is currently $75,000 and is projected to exceed $300,000

per year in 30 years5

A 50-year-old couple who each need 2.5 years of care beginning at age 82 can

expect to pay over $1.8 million for that care6

1U.S. Department of Health and Human Services www.longtermcare.gov2U.S. Census Bureau Population Estimates as of 7/1/2006

3Genworth claims department4Genworth claims department

5Genworth 2010 Cost of Care Survey 6Assumes cost of care increases at 5% per year

The Need for LTC PlanningThe Need for LTC Planning


Key Components of a LTC Plan:

Daily/Monthly Benefit

Benefit Account Value / Pool of Money (Monthly Benefit x Benefit Period)

Inflation Protection (Automatic – Compound/Simple/CPI, or Periodic - FPO/GPO)

Elimination Period (Calendar or Service Days)

Levels of Care – Nursing Home, Assisted Living, Home Care, Informal Care

Claim Payment Method (Reimbursement, Indemnity or Cash)

Patient Advocacy Component/Provider Locator Assistance

Program Options in the Worksite Market:

Voluntary

Employer Funded Base Plan With Buy-Ups

Executive Carve-Out

LTC Insurance OverviewLTC Insurance Overview


Voluntary Plan:

Demographic Analysis is Essential to Set Expectations

Typically Offered to All Eligible Employees/Group Can Be Stratified By Class

Program Access is Driven By Group Size, Industry, Demographics

Program Success is Dependent on Communication Access, Employer Support, Timing

Employer Funded Base Plan With Buy-Ups:

Demographic Analysis is Essential to Set Expectations

Can Be Offered to All Eligible Employees/Group Can Be Stratified By Class

Improves Pricing and Underwriting By Dispersing Risk

Can Bring “Large Group” Access to Mid Size Groups

Program Success is Still Dependent on Communication Access, Employer Support, Timing

Program Options OverviewProgram Options Overview


Highlights:

Discriminatory benefit (excluded from new PPACA nondiscrimination rules)7

Premium contributions for executives and their dependents are tax

deductible to the employer8

Employee pays no imputed income for the value of the benefit8

Long-Term Care Insurance benefits are income-tax free8

Benefits can be structured to reduce estate-tax liability

7Genworth Financial, Bulletin: Providing LTC Insurance only to Highly Compensated Employees, 9/3/20108American Association of Long-Term Care Insurance www.aaltci.org

Program Options Overview:Program Options Overview:LTC Executive Carve-outLTC Executive Carve-out


Sample Scenario:

50 year-old executive

Company funds and deducts LTC Insurance premium

Company creates a “golden handcuff” by funding a 10-pay

Premium is not counted as imputed income to executive

Plan is fully portable

Executive retires at age 65

At age 80, executive has access to $2.4 million in tax-free benefits9

At age 85, executive has access to $3 million in tax-free benefits9

At age 90, executive has access to $3.9 million in tax-free benefits99 Assumes $300 per day, 5 year benefit period, and 5% compound inflation protection

Program Options Overview:Program Options Overview:LTC Executive Carve-outLTC Executive Carve-out


Product PortfolioProduct Portfolio Group LTC Plans: Group Policy Held By Employer - Situs Based

Genworth

UNUM

Prudential

CNAMulti-life LTC Plans: Individual Policies Held By Insureds – State of Residence

Genworth

Prudential

Mutual of Omaha / United of Omaha

Transamerica

Asset-Based LTC Options: Annuities & Life Insurance With LTC Riders


Information Needed for Client Evaluation:

Client Name/Industry

Situs State

Current census file – DOB/Annual Salary/Job Title/DOH/Status/Residence State

Do they have any LTC Program in place currrently?

Are they looking for a specific enrollment period?

Do they have other voluntary programs – what is general participation in 401k, etc

How are benefits typically communicated and enrolled in this population?

How many major locations do they have?

Starting the Process – What We Will NeedStarting the Process – What We Will Need


Highlights:

New voluntary Government LTC plan established by PPACA

Many of the details will be worked out by the Sec of HHS by October 1, 201210

According to the Department of Health & Human Services , the new plan will be

implemented 2013

Employers will determine if they will participate in the program (no penalty for

employers not participating)10

If an employer participates in the program, employees would be automatically enrolled

unless they “opt out”10

No tax dollars can be used to offset premiums. Premiums must be “actuarially sound”10

10The Henry J. Kaiser Family Foundation:: “Health Care Reform and the CLASS Act, April 2010

The CLASS ActThe CLASS Act


Benefits and Eligibility

Pays a minimum benefit of $50 per day if a person needs assistance with ADLs

No annual or lifetime maximum

Enrollees must pay premium for 5 years before they would be eligible for a benefit

Inflation protection will be based on the CPI

Intended for working Americans who have a disability or health condition that would

prevent them from obtaining private LTC insurance

Does not currently address eligibility for family members

The CLASS ActThe CLASS Act


The CLASS ActThe CLASS Act (timeline)

Secretary to designate a CLASS benefit plan by October 1, 2012

Secretary to establish procedures for enrolleesto apply for benefits by January 1, 2012

Enactment of CLASS Act, March 23, 2010

Formation of CLASS Advisory Council Establishment of CLASS Independence Fund Development of alternative CLASS benefit plans Establishment of enrollment procedures Establishment of state-based eligibility assessment

system

Issuance of Annual Secretary Reports to Congress, beginning January 1, 2014

20142013201220112010


Services Include:

Client Evaluation

Due Diligence

Client Meetings/Presentations/Point-of-Sale Support

Comprehensive Implementation/Enrollment/Account Management

Ongoing Education/Training/Licensure Support

CLASS Act Management and Resources

Client Audits

Ongoing Plan Management and Subsequent Enrollment

LifeCycle Benefits: Your LTC PartnerLifeCycle Benefits: Your LTC Partner


Expertise Includes:

25+ Years of Employee Benefit Experience 16+ Years of Group Long-Term Care Experience –

Sales/Service/Implementation/Enrollment Implementation of over 100 major Corporations, Colleges & Universities Comprehensive LTC Industry Licensure/Continuing Education, CLTC Certification Active Participant in key Industry Organizations Industry Author and Speaker Vital Strategic Partnerships With Industry Leaders for Product Access/Support Personal Experience With Alzheimer’s & LTC Insurance Utilization

LifeCycle Benefits: Your LTC PartnerLifeCycle Benefits: Your LTC Partner


Integrating LTC into the Existing Client Service Model:

Current client service schedule (monthly, quarterly, pre & post renewal)?

When are new products or services typically introduced and how?

Who is responsible for introducing these products?

Review of Client Opportunities to Determine Best Approach

Discussion

Next StepsNext Steps


Background InformationBackground Information


Contact InformationContact Information

Ruth LarkinPresident

LifeCycle Benefits2000 Wadsworth Blvd., #202Lakewood, CO 80214Office: 303-202-5058Mobile: [email protected]


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Confidential & Proprietary Long-Term Care Insurance: An Emerging Employee Benefit Opportunity Ruth...

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