Opportunities in Long Term Care May 24, 2006 DBK CONSULTING

LTC- Partnerships and tightening of Medicaid Rules – Signed into law on 2/3/06 Extension of look-back period for asset transfer from 3 to 5 years prior to applying for Medicaid coverage. Applicants will need to meet spend-down limits prior to the penalty period beginning. Applicants required to disclose and produce any interest in annuities, all transfers within the past 5yrs, and a statement as to the remainder beneficiary status. Denies Medicaid coverage for nursing home care to those with home equity valued above $500,000.

LTC- Partnerships and tightening of Medicaid Rules – Signed into law on 2/3/06 Existing Partnerships grandfathered – CA, CT, IN, NY Agent training required before a new partnership policy can be sold. Existing policies will need to be “exchanged” for a partnership policy.

Own Your Future. US Department of Health and Human Services promoting second wave of its Long-Term Care Awareness Campaign Kansas, Maryland and Rhode Island Governor letter to year old residents Plan for long term care

LTC Provisions in House-passed Pension Reform A House-Senate Conference reconciling the differences between the House and Senate versions of Pension Reform. The House version includes a LTC tax incentive. The House provision would: Allow insurers to use tax-free charges against life and annuity cash values to pay for QLTCi Permit tax-free exchanges of life insurance and/or annuities for QLTCi

Pending Proposals S. 1244/H.R. 2682, LTC and Retirement Security Act – Sens. Grassley (R-IA) and Lincoln (D-AR) and Reps. Johnson (R-CT) and Pomeroy (D-ND) Above the line deduction Availability through Cafeteria and FSAs Caregiver credit

Pending Proposals S. 1602, Improving LTC Choices Act introduced by Sens. Grassley (R-IA) and Clinton (D-NY). Disregard benefits paid under LTCi for purposes of determining Medicaid eligibility Expand LTCi partnerships Individual deduction for QLTCi Availability of QLTCi under cafeteria plans and FSAs Credit for individuals with LTC needs

Pending Proposals H.R. 1150, introduced by Rep. Brown-Waite (R-FL). Tax Credit for Payment of LTCI Premiums

Pending Proposals S. 602/H.R. 1262, LTCI introduced by Sen. Mikulski (D-MD) and Rep. Smith (R-NJ). “Above the line” deduction provisions added to Alzheimer’s research bill

Pending Proposals S. 1706/H.R. 976 introduced by Sen. Allen (R-VA) and Rep. Terry (R-NE). Distributions from 401(k) plans and Sec. 403(b) contracts will not count as income if used to pay LTCI premiums

Pending Proposals H.R introduced by Rep. McHugh (R-NY). Allows distributions from retirement plans to purchase LTCi premiums.

Pending Proposals H.R introduced by Rep. Davis (D-CA). Deduction for QLTCi premiums and allow under cafeteria plans and FSAs.

Pending Proposals H.R introduced by Rep. Nancy Johnson (R-CT). Tax exclusion for QLTCi purchased using payments from life insurance or annuities.

Pending Proposals H.R introduced by Rep. Brown-Waite (R-FL). Deduction for LTCi.

Pending Proposals S introduced by Sen. Menendez (D-NJ). Tax deduction for LTC premiums.

Pending Proposals S introduced by Sen. Santorum (R-PA). Allows insurers to use tax-free charges against life insurance and annuity cash values to pay for QLTCi. Permits QLTCi under cafeteria plans and FSAs. Allows for creation of tax-free savings accounts which would allow individuals to contribute up to $5,000 per year. Account earning accumulate income tax free. Distribution used to pay for LTC expenses would be tax-free.

Pending Proposals S introduced by Sen. Burr (R-NC) Individual deduction for health and LTC insurance costs.

Pending Proposals S introduced by Sens. Smith (R-OR) and Lincoln (D-AR). Establishes LTC trust accounts allowing individuals to contribute up to $5,000 annually. Contributions would receive a 10% refundable tax credit. Interest earned accumulate tax free. Contributions could be made to one’s own account, or to an account to benefit someone else (e.g. behalf of aged parents).

SENATE FINANCE REPUBLICANS CHARLES GRASSLEY, IA ORRIN G. HATCH, UT TRENT LOTT, MS OLYMPIA J. SNOWE, ME JON KYL, AZ CRAIG THOMAS, WY RICK SANTORUM, PA BILL FRIST, TN GORDON SMITH, OR JIM BUNNING, KY MIKE CRAPO, ID DEMOCRATS MAX BAUCUS, MT JOHN D. ROCKEFELLER, WV KENT CONRAD, ND JAMES M. JEFFORDS, VT JEFF BINGAMAN, NM JOHN F. KERRY, MA BLANCHE L. LINCOLN, AR RON WYDEN, OR CHARLES E. SCHUMER, NY

HOUSE WAYS & MEANS REPUBLICANS Bill Thomas, CA E. Clay Shaw Jr., FL Nancy L. Johnson, CT Wally Herger, CA Jim McCrery, LA Dave Camp, MI Jim Ramstad, MN Jim Nussle, IA Sam Johnson, TX Phil English, PA J.D. Hayworth, AZ Jerry Weller, IL Kenny C. Hulshof, MO Ron Lewis, KY Mark Foley, FL Kevin Brady, TX Thomas M. Reynolds, NY Paul Ryan, WI Eric Cantor, VA John Linder, GA Bob Beauprez, CO Melissa A. Hart, PA Chris Chocola, IN Devin Nunes, CA DEMOCRATS Charles B. Rangel, NY Fortney Pete Stark, CA Sander M. Levin, MI Benjamin L. Cardin, MD Jim McDermott, WA John Lewis, GA Richard E. Neal, MA Michael R. McNulty, NY William J. Jefferson, LA John S. Tanner, TN Xavier Becerra, CA Lloyd Doggett, TX Earl Pomeroy, ND Stephanie Tubbs Jones, OH Mike Thompson, CA John B. Larson, CT Rahm Emanuel, IL

WATCHERS S. 1244/H.R. 2682, LTC and Retirement Security Act introduced by Sens. Grassley (R-IA) and Lincoln (D-AR) and Reps. Johnson (R-CT) and Pomeroy (D- ND). S. 1602, Improving LTC Choices Act introduced by Sens. Grassley (R-IA) and Clinton (D-NY). H.R introduced by Rep. Nancy Johnson (R-CT) on 9/27/05. Tax exclusion for QLTCi purchased using payments from life insurance or annuities. S introduced by Sen. Santorum (R-PA) on 2/14/06. Allows insurers to use fax-free charges against life insurance and annuity cash values to pay for QLTCi and allows QLTCi under cafeteria plans and FSAs. Allows for creation of tax-free savings accounts to pay for LTC expenses. S introduced by Sens. Smith (R-OR) and Lincoln (D-AR) on 3/9/06. Establishes LTC trust accounts and allows a refundable tax credit for contributions.

HOW DO YOU KEEP UP? Continue to attend programs like this one Join the Association of Health Insurance Advisors Obtain the CLTC Designation