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

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.

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.

How Does One Pay for Long Term Care?

• Long Term Care Insurance• Life Savings• Reverse Mortgage• Veterans Benefit - “Aid and Attendance”• Medicaid

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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

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!