NAIC Partnership Training:
Threat or Opportunity?
Skip Liddell CLU, ChFC, LLIF, CLTC
National Sales & Marketing Director
CLTC and CLTC Partnership Training
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CLTC Partnership Training
09/25/07
DRA 2005
Known for Medicaid eligibility changes
Opened Partnership Programs to all states
Requires new LTC agent training mandates
09/25/07
CLTC Partnership Training
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The Deficit Reduction Act of
2005 and its impact on
Medicaid planning
The basics…
 The look-back period has been increased from 3 to 5
years.
 The start of the penalty for gifts made during the
preceding 5 years begins on the date of application for
benefits: there is no “credit” for the penalty which,
under the old law started on the date the gift was
made.
 The use of Medicaid friendly annuities is still allowed
but the state must be named the beneficiary.
Continued…
 The state can deny eligibility if a home has more
than either $500,000 or $750,000 in equity
regardless of whether a spouse is at home.
 Entrance fees in CCRC’s must be spent on
nursing home care before Medicaid will pay.
 States can easily apply for partnership plans.
Winners & losers
Increasing the look-back period
Losers
Winners





The state.
Nursing homes.
Long-term care insurance: If people
want to protect assets they have to
anticipate they will need nursing
home care at least 5 years before
they actually go in. That is next to
impossible to determine.
Reverse mortgage companies: The
family may decide to keep the
person home longer and pay for it
by taking equity out of the house.
Assisted living facilities: An ALF is
cheaper than a nursing home.


Medicaid planning attorneys. With a
3 year look-back they can likely
make a fee by telling the family of
an institutionalized loved one that
they only have to pay for this
period. A 5 year look-back basically
bankrupts the family.
A Medicaid plan i.e. gifting assets
must not take place 5 years before
applying for benefits. It is unlikely
the family will dispose of assets.
Changing the start of the penalty period
Winners

The state

Nursing homes: No more half-aloaf equals more private pay.

Long-term care insurance:
Nothing can be protected if a
person is near to or actually in a
facility. There is a strong
incentive to purchase the
product likely now supported by
elder law attorneys.
Losers

Medicaid planning attorneys: a
significant source of revenue
was half-a-loaf. It’s now dead.
Medicaid friendly annuities
Winners
 The state. See a trend
here?
 Nursing homes: In theory
there should be more
private pay patients. (See
“Losers”.
 Long-term care insurance:
Promoters of these
schemes regularly bad
mouthed the product. less
Medicaid planning options
= more LTCi if sold
correctly.
Losers
 Nursing homes: Making the
state the beneficiary of the
annuity does not help the
facility. They still get the
Medicaid rate.
 Medicaid planning attorneys.
 Promoters of Medicaid
friendly annuities. Why
would a person purchase the
product when the state, not
the children will get the
balance anyway?
No eligibility based on equity
Winners
 The state.
 Nursing homes.
 Home equity conversion
companies: The applicant
will be forced to take
money out of the house to
reduce the equity to either
$500,000 or $750,000
depending on the state
 LTCI: A no brainer.
Losers
 Families: They can’t hide
assets in a home anymore.
 Medicaid planning
attorneys: Another
significant source of fees
bites the dust.
 Real estate brokers. No
house means no
commission.
Entrance fees in CCRC’s
Winners
 The state.
 CCRC’s: They can receive
a private pay rate until the
entrance fee is spent. See
also “Losers:
 LTCi.
Losers



CCRC’s: Few have the
entrance fee. They likely will
have to borrow it and “front” the
monthly nursing home fee to the
individual. They will recover the
fees plus interest at death.
Children: No more inheritance.
Medicaid planning lawyers:
Although not used often
purchasing a CCRC’s was a
way to shelter large amounts of
money.
Partnership
Winners



The states
Facilities and companies that
provide long-term care
services.
Families: LTCi protects the
family not the individual and
protects lifestyle. Both are
devastated when Medicaid
planning is employed.
Losers
 No one
Long Term Care Partnership Plans
 The Deficit Reduction Act reinstated the
ability of states to establish a Long-Term
Care Partnership Program
WHO ARE THE PARTNERS?
 State
 Consumer
 Insurer/Agent
WHO PAYS NOW?
State governors’ concerns today focus on
rising Medicaid costs
 Medicaid:
49 %
 Medicare:
20 %
 Out-of-pocket:
18 %
 Private LTC insurance:
8%
 Other:
5%
* Source: CMS, Georgetown Univ. 2007 PIE Charts
THE PARTNERSHIP PREMISE
 To reduce Medicaid expenditures by delaying
or eliminating the need for people to rely on
Medicaid
 Encourage purchase of private LTC insurance
by giving an incentive for the consumer to buy
CONSUMER INCENTIVE
By purchasing a LTC policy sold through
the Partnership, asset protection from
Medicaid would equal the amount of
LTC insurance coverage
This amount of assets would not have to
be spent down to qualify for Medicaid
Example of Asset Disregard
Partnership Policy
Assets
Example 1
Example 2
Example 3
$ 50,000
$ 200,000
$1,000,000
Non-Partnership Policy
Example 4
$200,000
Partnership Plan
Payout
$ 50,000
$200,000
$500,000
$0
Medicaid
Spend Down
Required
$0
$0
$500,000
$200,000
Partnership Programs include
“Asset Disregard”
 Consumer buys private LTCI with a total benefit
value of $250,000
 Consumer needs care
 Consumer uses LTCI first
 If they use up the entire $250,000, their
application to Medicaid will allow them to keep
that amount in addition to their primary
protected assets like the home and car
INFLATION SPECIFICS
 Age 60 and under:
•
Some form of compound inflation protection must
be included
 Age 61 – 75:
•
Some form of inflation protection must be included
 Age 76 +:
•
•
Must offer inflation protection
(but is not required for application)
Partnership Training
NAIC Model Regs
Every licensed agent must complete this
new training in order to sell LTC
insurance,
regardless of the state’s adoption of
Partnership plans and
regardless of representing a Partnership
policy.
09/25/07
CLTC Partnership Training
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NAIC Model Regs
 The one-time training required shall be
no less than eight (8) hours and
 the ongoing training required by this
Section shall be no less than four (4)
hours every 24 months.
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CLTC Partnership Training
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The Monkey Wrench:
States Authority
Each state has the right to adopt or modify
the NAIC Model Regulation
Results: The normal chaos associated
with a national program regulated by 50
Departments of Insurance
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CLTC Partnership Training
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Example: Virginia Regs
 New Training is required for agents selling
Partnership policies only
 8 hours is broken down into 6 hour LTC & 2 hour
Partnership
 Past Credit: all LTC specific CE since 1/01/05 if
completed by 12/31/07
 Deadline for training completion:
Sept 1, 2007
09/25/07
CLTC Partnership Training
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Critical Issues
 Interpretation of each state’s regulations
 Understanding the options available to meet
the training requirements
 Having multiple training solutions
 Easy recording of CE
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CLTC Partnership Training
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State Updates
VA
ID
FL
MN
RI
9/1/2007
11/01/07
12/31/07
12/31/07
12/31/07
Class
On-Line
Yes
Yes
Pending
Pending
Pending
Yes
Yes
Pending
Pending
Pending
What’s the solution?
CLTC Partnership Training
www.LTCPartnershipTraining.com
09/25/07
CLTC Partnership Training
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Objectives
To develop and offer multiple training options
that satisfy the state specific regulations
that are:
 Simple
 Quick
 Inexpensive
Continuing Education
Classroom
Correspondence
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8 hours
Sign in/out
No Exam
Recorded 7-14 days
Course/ On-line
Exam triggers CE
Proctor/Affidavit
Recorded 24 hours
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CLTC Partnership Training
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Training Options:
Classroom
 8 hrs CE : entire LTC/Partnership
course
or
 2 hrs Accelerated Prep Review (No CE)
Prepares for On-Line course with Exam
09/25/07
CLTC Partnership Training
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Training Options:
Correspondence
On-Line course with exam
 State specific material included
 8 hours CE from passing exam
09/25/07
CLTC Partnership Training
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Tuition
On-Line Course & exam: $100
CLTC graduate discount: $50
Discount code: K02407HA
09/25/07
CLTC Partnership Training
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Tuition
Classroom
subject to class sponsor
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CLTC Partnership Training
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“
“Train the Trainers”
Options:
CLTC Staff will conduct:
 3-hour webinar training or
 4-hour live training
Provide Powerpoint for 8-hour class
Strategies for 2-hour Exam Review
09/25/07
CLTC Partnership Training
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Reciprocity
 Multi State Licensing?
 One Tuition covers all CE required
09/25/07
CLTC Partnership Training
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CLTC Partnership Training
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Simple
Quick
Inexpensive
Flexible
09/25/07
CLTC Partnership Training
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CLTC Partnership Training
LTCPartnershipTraining.com
09/25/07
CLTC Partnership Training
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Questions?
Please email your questions……
09/25/07
CLTC Partnership Training
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