Welcome to the eleventh edition of Long-Term Care in the News. We, at Custom Care Solution, LLC, want you to be on the cutting edge of changes and updates within the Long-Term Care industry. We will accomplish this through these email bulletins distributed each week to our brokers, agents and their staffs.

Long-Term Care In The News …….

Non-Tax Qualified LTC

The fundamental differences between a Tax-Qualified (TQ) Policy and a Non-Tax-Qualified (NTQ) Policy pertain to how disabled you must be in order to be eligible for the policies’ benefits and how the premiums and benefits of the policy are treated for income tax purposes. Penn Treaty is one of our LTC carriers that allows your clients to purchase either a TQ or an NTQ policy. In order to qualify for benefits under an NTQ policy your client must require assistance with at least 1 of the following 7 ADLs for Home and Community-based Care, and 2 of these ADLs for Facility care, (bathing, dressing, eating, ambulating, continence, transferring and toileting) or they must have Cognitive Impairment, (such as Senile Dementia, Alzheimer’s Disease, Organic Brain Syndrome, etc.) or the care must be essential to their health, safety and welfare and certified by their physician as such, (sometimes this is called Medically Necessary). There has been no formal ruling from the federal government about the taxability of benefits paid from a Non-Tax-Qualified policy. The IRS has said that the benefits of an NTQ Policy generally should not be taxable if they are paid under an accident and health insurance policy and are payable due to injury or sickness.

TQ vs NTQ in Action

Rose, 74 Her problem: severe pain and fatigue from Fibromyalgia, osteoarthritis and gait instability. Her needs: assistance with meal preparation, housekeeping, laundry and occasional assistance with bathing. The verdict for an NTQ Policy: the claim is payable under the policy’s Medically Necessary trigger. Rose was unable to remain at home due to the fatigue, pain and unsteadiness. She could not safely or adequately get out for groceries, cook, clean or get into and out of the tub. She moved to an Assisted Living Facility because she couldn’t make it at home any longer. $25,840 worth of benefits paid with Medically Necessity. The verdict for a TQ policy: the claim would be denied under a TQ policy. Rose needs help with one ADL only, bathing. She is sometimes unsteady walking but able to move about without assistive devices or human assistance.

Husband and Wife, Gary 87 and Irene 81 Their problem: Gary is an insulin-dependent diabetic, and has serious vision problems from a diabetic complication known as diabetic retinopathy. He also uses a walker outside, primarily for security given his vision loss. Irene is also a diabetic and on insulin. She, too has vision problems, stemming from glaucoma. Their needs: assistance with medication administration (including insulin injections), meal preparation, housekeeping, laundry and transportation. The verdict for an NTQ policy: Gary and Irene’s claims are payable under their policy’s Medically Necessary triggers. The verdict for a TQ policy: their claims would be denied. Neither Gary, nor Irene need any assistance with ADLs. Remember that even though Gary uses a walker outside, if you are capable of ambulating without another person’s assistance, you are considered independent with that ADL.

Call us today to get appointed with Penn Treaty and to learn more about their products including a Home Care Only in NY !!!!!

John Hancock / Manulife

Manulife’s Financial Corporation and John Hancock Financial Services, Inc., including its Canadian subsidiary, The Maritime Life Assurance Company, completed their merger on April 28, 2004 after receiving all necessary regulatory approvals. John Hancock is now a subsidiary of Manulife Financial. This transaction does not in any way affect the policies, plans, or benefits offered under their long-term care insurance coverage. The new company is committed to maintaining a market leadership position in long-term care insurance. As the population ages and long-term care service costs increase, John Hancock anticipates enormous growth potential for this important coverage. The John Hancock brand, one of the best-known brands in the U.S. will continue to be the primary brand for products sold in the U.S. It is their vision to provide the very best financial protection and investment management products and services tailored to customers in every market where they do business. They expect that the combined financial strength ratings will continue to be among the very highest in the industry as judged by the major rating agencies.

MedAmerica Announces Rollouts in OR and VA

It is with pleasure that we wish to inform you that MedAmerica’s new flagship product, CareDirections Simplicity will be available for sale on May 3, 2004 in Oregon and Virginia. Remember, Simplicity is a CASH long-term care policy. This means that your client receives a monthly check from MedAmerica for their full monthly benefit even if they are receiving 100% informal home care. As we have previously announced, Simplicity is available in NY and NJ and is priced very competitively with other carriers REIMBURSEMENT type plans. MedAmerica also offers a discounted Affiliation Program and Employer Program for voluntary LTC or employer carve-out opportunities. In addition they have a True Group LTC plan which accounts for nearly 50% of MedAmerica’s total in-force business. Get your business into high gear! With over 15 years of experience and dedication to long-term care insurance, MedAmerica is a partner you can count on for the long-term. Learn how you can partner with them, call us today to discuss your next case.

MetLife’s Compensation Change

Effective July 1, 2004, the commission schedule for MetLife’s Individual Long-Term Care Insurance product will change. The changes are the result of two developments in their business; changes in their underlying product financial structure, and secondly, in response to requests from their distribution partners. It is their goal to meet the financial needs of their product and thereby ensure MetLife’s long-term stability in this market. At the same time, they want to meet producer needs for competitive and rewarding compensation schedules. We will be sending a letter to all of our MetLife contracted brokers under separate cover to address these changes.