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Long Term Care Planning For Veterans and Medicaid Benefits By: Randy “Positive” Alexander

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.

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Long Term Care Planning For Veterans and Medicaid Benefits By: Randy “Positive” Alexander

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  1. Long Term Care Planning For Veterans and Medicaid Benefits By: Randy “Positive” Alexander Unprecedented Opportunity For Insurance Agents In 2011

  2. What Is Long Term Care? • Long term care is provided to those individuals who cannot independently meet their daily needs

  3. 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.

  4. 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.

  5. How Does One Pay for Long Term Care? • Long Term Care Insurance • Life Savings • Reverse Mortgage • Veterans Benefit - “Aid and Attendance” • Medicaid

  6. 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.

  7. 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.

  8. 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.

  9. 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.

  10. 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.

  11. 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.

  12. 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.

  13. 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.

  14. 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.

  15. 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.

  16. 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

  17. 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!

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