Welcome to the third 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 ……..

 

The buzz word lately are actually only three little letters …  HSAs.  Effective January 1, 2004, individuals who are covered under “high deductible health plans,” and not Medicare, are eligible and may deduct amounts paid into HSAs (subject to certain limits) from their gross federal taxable income.  These are health plans with a minimum deductible of $1,000 for self-only coverage or $2,000 for family coverage.  Also, the total out-of-pocket expense, including the deductible, to the individual cannot be more than $5,000 for self-only coverage or $10,000 for family coverage.

 

HSA contribution amounts are specifically tied to the deductible for the individual’s health plan and cannot exceed $2,600 for self-only coverage or $5,510 for family coverage in 2004 (higher amounts are permitted for individuals between the ages of 55 and 65).

 

Contributions may continue until the person becomes eligible for Medicare.  Once a person is eligible for Medicare, contributions may no longer be made to an HSA.

 

To encourage adoption among older individuals, a “Catch-up” provision helps older workers contribute more.  Under this provision, the IRS allows people between 55 and 65 to contribute an additional $500 to their HSAs in 2004, provided the total amount contributed does not exceed the deductible.  The “catch-up” amount will increase in $100 increments each year until 2009, when it reaches $1,000.

 

Beginning in 2004, anyone who participates in an HSA will be able to pay up to the age-related “eligible” portion of premiums for tax qualified Long-Term Care Insurance plans from their HSA.  The HSA also may be able to cover some of their qualified long-term care expenses.  The amount of “eligible” LTCI premium that can be included is limited to the age-based amounts per Section 213(d)(10)(A) of the Internal Revenue Code.

 

The allowable eligible long-term care premium amounts are shown below:

Age at End of Taxable Year:                                       2004

40 and younger                                                                       $260

41 – 50                                                                         $490

51 – 60                                                                         $980

61 – 70                                                                         $2,600

71 and older                                                                $3,250

 

For example:  In 2004, a person,, age 62 would be able to offset the annual cost of qualified LTC Insurance premiums by paying the $2,600 age-eligible amount of his or her premium with pre-tax dollars from the HSA (this assumes that the individual purchased a health plan with a deductible of at least $2,600 and contributed the full amount of the deductible to the HSA, and also, has no need or desire to cover other medical expenses from the HSA).  Plus, if their spouse, age 55, also had an HSA, the spouse would have $980 in eligible funds from the HSA to pay his or her LTC Insurance premiums. 

 

If you have questions please give us a call or contact a tax specialist or tax advisor for more specific details.

 

 

 

Important Underwriting Update:  Philosophy and Approach to Cognitive Screening.  Over the past several months, John Hancock as received a number of inquiries regarding their philosophy and approach to cognitive screening, including questions about age criteria, tools utilized, scoring of the test, and administration of the cognitive screen.  In response to these inquiries they have developed informational tools and forums to provide you with a better understanding of the cognitive screen.  The most important of these tools is their guidelines for you, the producer to ensure more favorable results on the Assessment.  They recommend the following steps:

 

  1. John Hancock’s Underwriting Process Brochure has been developed to prepare your client for the underwriting process.  It is critical to present this brochure to your client during the sales process.  This brochure is a “no cost” item and is available through Custom Care Solution, LLC.
  2. Advise your client that Nation’s CareLink will be the vendor contacting them.
  3. Advise your client to choose a quiet and appropriate time to complete the assessment.
  4. Advise your client that they may be asked to participate in a memory exercise.
  5. Advise your client that the telephonic assessment will take approximately 30 minutes and the face-to-face assessment will take approximately 45 minutes.

 

Over the years John Hancock has had many requests to re-test applicants that fall below acceptable standards.  They have consulted with medical specialists on the topic and they strongly advise against retesting.  Therefore, it is imperative that both you and your client take this interview and/or assessment seriously.

 

MedAmerica’s Simplicity receives top rating from SellingLTC.com!  We’re excited to announce that Simplicity, now available in AK, AL, AR, DC, DE, HI, ID, KS, LA, MN, MS, MT, NC, NV, NY, NM, PA, SC, WV, WY and VT, received the highest rating ever  - 91 – from SellingLTC..com.  Beating out the next ranked competitor by a solid 13 points!  Simplicity’s leading-edge design truly sets its apart from other products on the market.  Be sure to call us to learn more and stay tuned for more information from MedAmerica.

 

Prudential Long-Term Care Insurance Brokerage announced that The LTC By Design product was approved for sale in the state of Massachusetts on February 17th.  The “old” LTC insurance product is no longer available.  Effective immediately, LTC by Design will be the only product available for sale in MA.