The just released final text of the Enhancing American Retirement Now (EARN) Act maintains the positive feature that will increase sales of long-term care insurance predicts the American Association for Long-Term Care Insurance.
“The bipartisan measure passed the Senate committee in June and the just-released final text maintains the advantageous provisions to encourage long-term care planning,” explains Jesse Slome, director of the organization. The final draft will be used to negotiate the final text with the U.S. House of Representatives.
“The EARN Act allows the use of tax-exempt retirement plan distributions to pay for long-term care insurance premiums,” Slome explains. “Specifically, it excludes such distributions from the gross income of an insured individual up to $2,500 per individual starting in 2024.” Subsequent amounts will be indexed annually to track inflation.
Roughly 60 million Americans have 401(k) plans in place according to AALTCI data. The average 401(k) balance for individuals between ages 55 and 64 is $232,000. The average balance for those 65 and older is $255,000 according to recently reported data.
“Using a small portion of your retirement plan to protect your full retirement savings will be seen as a very smart financial move,” Slome suggests. According to the Association’s 2022 Long-Term Care Insurance Price Index, a 65-year-old male could pay between $1,700 and $3,135 yearly for future benefits of $296,000 when they reach age 85. Insurance costs more for women.
According to Slome, the tax-exemption benefit will apply to both 7702(b) traditional LTC insurance plans as well as those meeting 101(g) IRS provisions. “That’s welcome news for the linked-benefit long-term care policies that meet the 101(g) provisions,” Slome notes. Not all linked-benefit or hybrid long-term care plans meet these provisions he adds.
The American Association for Long-Term Care Insurance (AALTCI) advocates for the importance of long-term care planning and supports insurance professionals who market both traditional and hybrid long-term care solutions. To learn more about long-term care insurance tax information, go to https://www.aaltci.org/long-term-care-insurance/learning-center/tax-for-business.php.
To learn more about long-term care planning or for insurance costs from a national specialist, go to https://www.aaltci.org or call the organization at 818-597-3227.
American Association for Medicare Supplement Insurance Jesse Slome 818-597-3205 https://www.aaltci.org
The Washington State long-term care program was put on hold today according to information shared by the American Association for Long-Term Care Insurance.
“Governor Inslee and the state’s legislative leaders agreed to delay the WA Cares payroll tax on employees,” shared Jesse Slome, director of the organization. Slome was sharing updates with information with insurance professionals who market long-term care insurance solutions.
“The stated reasoning is a desire to give legislators the opportunity to make refinements to the new program,” Slome explained. “However, I’ve seen this play before and I’d say they are gauging consumer anger at being taxed.”
Slome noted that a national long-term care insurance program was included and passed in 2010 as part of the federal Affordable Care Act (Obamacare). “While it was passed and signed into law, it basically vanished from existence virtually overnight,” Slome shared. “Will the WA Cares Act suffer from the same fate, only time will tell.”
A Washington state employee earning $100,000 would be taxed $48 monthly Slome explained. “That doesn’t sound like a huge sum but for someone in their 20s and 30s it’s money for a benefit they don’t think they’ll ever need,” Slome adds.
Slome advised those agents who have sold policies to individuals in Washington to maintain active communication with clients during this time. “Cancelling a policy could result in voiding their exemption from the tax,” Slome cautions. He notes that insurers have indicated they will charge back commissions should individuals not maintain their policy in force for a certain period of time.
The American Association for Long-Term Care Insurance advocates for the importance of long-term care planning and supports insurance professionals who market LTC insurance solutions. For more information, visit the organization’s website at www.aaltci.org.
American Association for Medicare Supplement Insurance Jesse Slome 818-597-3205 www.aaltci.org
Half of long-term care insurance claims begin when policyholders are in their 80s according to data reported today by the American Association for Long-Term Care Insurance.
“Millions of Americans are living into their 80s, 90s and even 100s,” explains Jesse Slome, director of the long-term care insurance organization. “When you live a long life, the likelihood that you’ll need some long-term care increases exponentially.”
The Association has just posted data regarding ages when long-term care insurance claims begin. “Half of claims begin between 80 and 89,” Slome reports. “Some 27 percent begin between age 80 and 84, with 23 percent between ages 85 and 89.” Twelve (12) percent of claims begin when the policyholder is age 90 and older.
If an individual wants the benefits of long-term care insurance to pay for needed care, coverage must generally be purchased prior to turning age 65. “Unfortunately, many people don’t do any planning until the need for care is either imminent or already present,” Slome admits. “At that point it is too late because insurance companies will only issue policies to those who can health qualify.”
According to the Association the average age for those buying new traditional long-term care insurance policies remains between 56 and 57. “The cost of coverage will be significantly less than if you wait until your 60s or 70s,” Slome explains.
The organization recently undertook a campaign reporting long-term care insurance claims statistics. “We regularly encounter denial among consumers who mistaken believe there’s little or no risk,” Slome concludes. “We share real information focused on how many people need long-term care and how and when they benefit from owning long-term care insurance. The hope is that an educated consumer will better understand the risk they face and get information to decide what is best for their needs.”
The American Association for Long-Term Care Insurance (AALTCI) advocates for the importance of planning and supports insurance professionals who market both traditional and hybrid LTC solutions. To obtain long-term care insurance costs from a long-term care insurance specialist call the organization at 818-597-3227 or visit their website www.aaltci.org/ltcfacts-2022/.
American Association for Medicare Supplement Insurance Jesse Slome 818-597-3205 www.aaltci.org
Remarks and updated information regarding the Washington State long-term care initiative were released today by Jesse Slome, director of the American Association for Long-Term Care Insurance.
“There is a lot of attention being focused on the Washington imitative,” shares Jesse Slome, director of the long-term care insurance organization. “Our goal is to provide periodic updates of key information and share some perspective regarding this important program.”
The American Association for Long-Term Care Insurance (AALTCI) advocates for the importance of planning and supports insurance professionals who market both traditional and hybrid LTC solutions.
To read the Washington Long-Term Care Program Update visit the Association’s website at www.aaltci.org/news/long-term-care-insurance-news/washington-state-long-term-care-insurance-update.
American Association for Long-Term Care Insurance Jesse Slome 818-597-3205 www.aaltci.org
Three leading long-term care insurance companies have changed rules for Washington state residents looking to exempt themselves from the pending new payroll tax according to the American Association for Long-Term Care Insurance (AALTCI).
“The new tax will cost Washington workers starting next year and many are looking into long-term care insurance as a way to avoid the tax,” explains Jesse Slome, director of the long-term care insurance organization. “Insurers realized that many individuals were likely buying low amounts of coverage and others intend to drop coverage once they achieve their goal of tax exemption.”
As a result, insurers have just issued new minimum levels of required protection and new procedures. “It generally costs an insurer between $600 and $800 to health underwrite and issue a policy,” Slome explains. “In addition, insurers pay commissions to the selling agent all of which are only recouped when a policy remains on the books for several years.”
According to Slome, Mutual of Omaha will automatically decline applications from individuals who have not been seen by a physician in the last 24 months. In addition, the company will do a chargeback on commissions paid on policies issued through November 1, 2021 that are lapsed within the first policy year.
“Increasingly agents are telling us they do not want to spend time with consumers looking for a policy explicitly to avoid the tax,” Slome notes. “While the State regulations do not currently require coverage be in place next year, I fully expect subsequent State-amendments will address this after legislators realize they left a loophole.”
A second carrier, National Guardian Life (NGL), has set the policy minimum Daily Benefit Amount at $100 for Washington residents. Applications with a $50-to-$90 benefit amount selected will not be accepted by the company. In addition, applicants must choose an inflation option and those opting for facility only benefits will not be accepted.
“NGL is also requiring that applicants have been seen by a physician within the past 24 month,” Slome notes. “That will limit younger applicants in their 30s and 40s who often do not get regular physical examinations.” The company will also chargeback paid commissions if premiums are not paid for the second year of coverage.
According to Slome, a 45-year old Washington male selecting a $100 daily benefit with no inflation growth would pay around $361 annually. “Adding the 3% inflation option raises the cost to $794 and selecting the 5% option takes it to $1,751,” he says. “For a 45-year old female selecting the 3% inflation option the annual premium cost will be $1,304.”
The new Washington tax adds an uncapped payroll tax of .58% on all wages beginning January 1, 2022. “Someone earning $150,000 yearly will pay $870 in added taxes,” Slome shares. “The new insurer rules have changed what we share with consumers. I would say that $125,000-to $150,000 in annual income is the minimum threshold where considering private long-term care insurance makes sense.”
Changes imposed by Thrivent include increasing the minimum issue age to 40 for Washington residents as well as increasing the minimum monthly benefit to $3,000. “In this case, a 45-year old male picking a $3,000 monthly benefit with 2 years of coverage will pay $351 yearly,” Slome explains. “Many agents are going to advocate for at least a 1% inflation growth option which raises the cost to $460 yearly.”
The American Association for Long-Term Care Insurance (AALTCI) advocates for the importance of planning and supports insurance professionals who market both traditional and hybrid LTC solutions. To obtain long-term care insurance costs from a Washington specialist call the organization at 818-597-3227 or visit their website.
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