Frequently Asked Questions
What is a Long Term Care Benefit Plan?
A: The Long Term Care Benefit Plan is the conversion of an in-force life insurance policy into a pre-funded, irrevocable Benefit Account that is professionally administered with payments made monthly on behalf of the individual receiving care. It is a unique financial option for seniors because all health conditions are accepted, and there are no wait periods, no care limitations, no costs to apply, no requirement to be terminally ill, and there are no premium payments. Policy owners use their legal right to convert an in-force life insurance policy to enroll in the benefit plan, and are able to immediately direct payments to cover their senior housing and long term care costs.
This option extends the time a person would remain private pay and delays their entry onto Medicaid. The policy transaction is specifically designed to conform to the secondary market regulations that govern life settlement/viaticals, and the Benefit is administered specifically to be a Medicaid qualified spend-down of the asset proceeds. By obtaining the fair market value for the life policy, and then at the direction of the policy owner putting the funds into an irrevocable bank account which can only be administered third-party to pay for Medicaid/Medicare qualified long term care services; the Long Term Care Benefit Plan is a regulated and Medicaid qualified financial vehicle to help cover the costs of long term care.
What types of life insurance qualify for conversion into a Long Term Care Benefit Plan?
A: The conversion option applies to any form of life insurance: Universal, Whole, Term, and Group. The value of the conversion is based solely on the death benefit, and cash value is not a factor in determining the conversion value of a life insurance policy.
What forms of long term care qualify?
A: The Benefit Plan will pay the following monthly expenses directly to the health care provider:
• Nursing Home
• Assisted Living
• Hospice Care
• In-Home Nursing/Health Care
Is there a Funeral Benefit?
A: Yes, all Benefit Accounts reserve 5% of the death benefit or $5,000, whichever is the lesser, to provide a funeral benefit payment to the Account’s named beneficiary.
Are there any fees or obligations to apply?
A: No, there are no application fees and no obligations to apply. Once a policy is converted by the owner, the Long Term Care Benefit payments begin immediately and the enrollee is relieved of any responsibility to pay any more premiums.
How long does the enrollment process take?
A: The typical enrollment time is 30 days. The actual time to complete the process will vary on the applicant’s ability to provide the necessary requirements for review such as: signed application and authorizations, copy of life insurance policy, last two years of medical records, and offer/enrollment packet.
What happens if the enrollee dies before all of the Long Term Care Benefit is paid out?
A: Should the enrollee pass away with additional funds remaining in their Benefit Account, the remaining balance is paid directly to the enrollee’s named beneficiaries. Enrollees and/or their beneficiaries are assured to receive the full Benefit amount even if the client dies before all monthly payments have been made.
Is the enrollee actually transferring the ownership of the life insurance policy?
A: Yes, the enrollee will transfer all ownership and benefi¬ciary rights to the life insurance policy to enroll in the Long Term Care Benefit Plan. From the moment the Benefit Plan is established, the Benefits Administrator will begin making monthly payments to the appropriate health care provider as well as all future premium payments on the life insurance policy. The enrollee is no longer responsible for premium payments and the policy is no longer considered an asset that will count against them for future Medicaid eligibility.
Which states can a policy be converted?
A: A life insurance policy owner has the legal property ownership right to convert their policy into a Long Term Care Benefit Plan in every state in America.
How is a Long Term Care Benefit Plan regulated?
A: The policy transaction is specifically designed to conform to the secondary market regulations that govern life settlement/viaticals; and the Benefit is administered specifically to be a Medicaid qualified spend-down of the asset proceeds. By obtaining the fair market value for the life policy, and then at the direction of the policy owner putting the funds into an irrevocable, FDCI insured bank account which can only be administered third-party to pay for Medicaid/Medicare qualified long term care services; the Long Term Care Benefit Plan is a regulated and Medicaid qualified financial vehicle to help cover the costs of long term care.
How is the Long Term Care Benefit Account safe-guarded?
A: The Benefit Plan is an irrevocable; FDIC insured Long Term Care Benefit account held by a nationally chartered Bank & Trust and then administered by a licensed, third party benefit administration company ensuring that the funds are protected and only used for the recipient of care. The account also has the added protection for the enrollee of paying any remaining balance to a named account beneficiary and/or providing a final expense benefit to help cover funeral expenses.
How is the Long Term Care Benefit Plan administered?
A: The Benefit Plan is held as an irrevocable account by an FDIC insured, nationally chartered Bank & Trust company, and the monthly benefit is administered third-party by a licensed Benefit Administration company.
1. First, the policy owner voluntarily directs a licensed Provider that the entirety of the proceeds from their policy conversion is moved from an escrow account and into their irrevocable, Benefit Account held by an FDIC insured, Chartered Bank & Trust Company.
2. Second, the enrollee provides specific instructions that the irrevocable account be used only to make monthly payments directly to their choice of long term care provider (home health, assisted living, and nursing home) and monthly payments are administered third-party by a licensed Benefit Administrator.