New law, new options
In June 2013, Texas was the first state to pass a law allowing seniors to sell their life insurance policies to help pay for their own long-term care. This also may help seniors delay reliance on Medicaid and help relieve individuals and their families from financial burden. Today, several states are endorsing life settlements as a means for covering the costs of long-term care. As of March 2014, 12 other states have introduced similar legislation to help and educate seniors about their options.
Benefits of Long-Term Care Benefit Plans
Consider the benefits of converting an unwanted or unneeded life insurance policy to a long-term care benefit plan:
- A simple application and review process
- Generally, quick approval and funding
- No more premium payments—ever
- Most types of life insurance policies qualify
- Monthly payments are made directly to the health care provider or facility of your choice
- A funeral expense benefit also is included
How does the plan impact Medicaid?
For those applying for Medicaid, a life insurance policy is considered to be an asset. If a policy has anything more than a minimal amount of cash value (usually about $2,000), the policy must be liquidated and that money spent toward caring for the insured before the insured will be able to apply for Medicaid. Generally speaking, Medicaid applicants may be asked whether they own life insurance policies, and the details of those policies.
A Long-Term Care Benefit Plan is a qualified “spend-down” of the policy asset. Once the benefit is spent down (all payments made to the appointed care provider), the participant would then be able to apply for Medicaid without the life insurance policy (asset) counted against them.
How long is the application process?
Generally, Atina Funding’s application process is 30 to 90 days. If approved, payments will be made directly to the care providers.
What happens if I die?
If the plan participant dies before all benefits are paid, any remaining balance at the time the participant dies is paid directly to the deceased’s named beneficiaries.
Long-Term Care Solutions
Each year, the costs of long-term care seem to escalate. The sale of a life insurance policy can help offset some of the high costs of long-term care. Atina Funding is a licensed life settlement broker, and we assist seniors age 65 or older convert their unwanted and unneeded life insurance policies into long-term care benefit plans.
How it works
The proceeds from the sale of a life insurance policy are used to fund a Long-Term Care Benefit Plan. The funds are deposited into an irrevocable, FDIC-insured benefit account, and monthly payments are made directly to the health care provider of your choice. The plan also reserves a tax-free, final expense payment to help families pay for funeral costs.
What is a Long-Term Care Benefit Plan?
A Long-Term Care Benefit Plan is simply the conversion of an in-force life insurance policy to a pre-funded, federally insured, irrevocable benefit account. The account is professionally administered with payments made on your behalf to the long-term care provider.
Is this an insurance policy?
No, A Long-Term Care Benefit Plan established through the sale of a life insurance policy is not a long-term care insurance policy. A Long-Term Care Benefit Plan is a pre-paid benefit plan. Benefits are paid directly to the service provider at the same time the care is provided.
What types of life insurance plans qualify?
Most types of policies qualify including universal, whole life, group or term (depending on conversion options or any restrictions the policy may have).
What forms of senior care qualify?
A Long-Term Care Benefit Plan is designed to pay monthly expenses directly to the care provider as needed. These include home care by private duty, non-medical or skilled nurses, assisted living, nursing home or hospice care.
What determines the benefit amount?
To determine the Long-Term Care Benefit amount, the following factors are considered: a) the face value of the policy (also known as the “death benefit”), b) annual premium payments, and c) the health care needs of the applicant.
How long do benefits last?
The average benefits period is one to two years. However, the Long-Term Care Benefit Plan is adjustable so the participant can customize monthly benefit payments to best suit individual needs. It is recommended participants consult with family members, an accountant or other financial advisor, and/or their estate planning attorney to devise the most suitable benefit payment schedule for the participant’s needs.
Is there a funeral benefit?
Yes. All Long-Term Benefit Plans include a funeral benefit, usually a reserve of five percent or $5,000, whichever is the lesser amount.
What fees apply?
Atina Funding charges a brokerage commission, paid by the buyer, and a nominal fee to assist in the application process.