NEWS YOU CAN USE

NANCY MORITH IS AWARDED THE "CASL" DESIGNATION

We are pleased to announce that Nancy P. Morith has been awarded the Chartered Advisor for Senior Living professional designation (CASL). This designation offers the most comprehensive education available for professionals who work with clients preparing for retirement and the challenges of senior living. In addition to financial considerations, CASL teaches advisors how to assist their clients with many important lifestyle issues. The American College awards the CASL designation to those who complete the rigorous educational curriculum and meet the necessary experience and ethics requirements.

2011-2012 "SCHEDULE A" PREMIUM LIMITS

For Tax-Qualified Long-Term Care Insurance Plans

When filing tax returns for the year 2010, policyholders wishing to take advantage of deducting the premium of their Tax-Qualified plans must itemize medical expenses on Schedule A. Remember, based on your attained age in 2011, you can include 100% of your long-term care (LTC) insurance premium or the amount listed below, whichever is less. The amount of allowable medical expenses exceeding 7 ½ % of your Adjusted Gross Income (AGI) is the amount that can be deducted.

Following are the current tax deduction limits for individual LTC insurance premiums paid during the listed tax year at the age attained by the policyholder in that year:

Attained Age Premium Limits

Before Close of Taxable Year: 2011 2012

40 & under $340 $350

41 to 50 640 660

51 to 60 1270 1310

61 to 70 3390 3500

71 & over 4240 4370

Disclaimer: The above information is not intended to provide legal or accounting advice. Clients should seek individual professional counseling from their personal attorney and/or accountant.

YEAR 2011-2012 PER DIEM LIMITATIONS

For Qualified Long-Term Care Policies – Reimbursement vs Indemnity

Some LTC insurance plans are indemnity benefit plans, as opposed to reimbursement plans. The per diem limit for tax year 2012 is $310 – the daily amount of benefits under a Tax-Qualified indemnity plan that can be received tax-free without regard to expenses incurred. Benefits in excess of the per diem limit may also be received tax-free, if they do not exceed expenses actually incurred and proof is given. (For tax year 2011, the limit is $300.)

Benefits provided by most LTC insurance plans are “expense incurred” benefits and not subject to the per diem limit. When reimbursed under a Tax-Qualified plan, the benefits may be received tax-free. Any excess expenses you may have incurred can be included on Schedule A as itemized medical expenses.

MEDICARE CO-PAY AMOUNTS FOR 2012

Medicare Part A – In Hospital

On the… You pay…

Initial Deductible $1156

Day 61 to 90 $289/day

Day 91 to 150 day $578/day

Day 151 & thereafter All Expenses

Medicare Part A – Skilled Nursing Facility

(Must follow at least a 3-day hospital stay and requires daily skilled care)

Day 1 to 20 Nothing

Day 21 to 100 $144.50/day

Day 101 & thereafter All Expenses

Medicare Part B – Medical Services

Annual Deductible (calendar year): $140

Medical expenses & outpatient hospital

treatments after the deductible: 20% of approved amount

Medicare Part B monthly premiums in 2012...

Individual income to... Married income to... Premium...

$85,000 $170,000 $99.90

$85,001-$107,000 $170,001-$214,000 $139.90

$107,001-$160,000 $214,001-$320,000 $199.80

$160,001-$213,000 $320,001-$426,000 $259.70

Over $213,000 Over $426,000 $319.70

Find more complete information at… https://questions.medicare.gov/app/answers/detail/a_id/2306

MEDICARE PART D - PRESCRIPTION DRUG PLAN

For information about the prescription drug program, you can visit:

Medicare: www.medicare.gov

(or go directly to https://www.medicare.gov/MPDPF/Public/Include/DataSection/Questions/Questions.asp )

This site provides an introduction to the new prescription drug coverage; a list of all plans approved to offer coverage by region; premiums, deductibles and number of drugs covered under each plan.

Medicare Rights Center: www.medicarerights.org

This site provides an evaluation of the new drug coverage; check out "Medicare Drug Coverage 101: Everything You Need to Know About the New Medicare Prescription Drug Benefit."

Kaiser Family foundation: www.kff.org

On left side of home page, choose "Medicare"; then "Prescription Drugs"; then scroll down to "Resources: On the Medicare Prescription Drug"

New Medicare Part D consumer guide released: http://www.kff.org/medicare/7067/index.cfm

February 2007, online consumer guide, "Talking about Medicare and Health Coverage."

FINDINGS FROM THE MATURE MARKET INSTITUTE

The 2010 MetLife Market Survey of Nursing Home, Assisted Living, Adult Day Services, and Home Care Costs, October, 2010:

Nationally:

The average daily rate for a private room in a Nursing Home is $229, or $83.585 annually
The average daily rate for a semiprivate room in a Nursing Home is $205, or $74825 annually
The average monthly base rate for an Assisted Living Facility is $3293, or $39,516 annually
The average hourly rate for Home Health Aides provided by a home care agency is $21 per hour
The average hourly rate for homemakers is $19
The average daily rates for adult day services is $67

Central NJ:

Nursing Home average daily cost: Semi-private = $293; Private = $321
Assisted Living Facility, base rate: $2890 - $5749 per month (approx. $96-$191/day)
Home Health Aide average cost: $18 - $30 per hour

LONG-TERM CARE PLANNING - IT'S IN YOUR HANDS

When the Deficit Reduction Act of 2005 was signed by President Bush in February 2006, the federal government sent a clear message to Americans...

Planning for long-term care is your responsibility!

The Cost of Long-Term Care Can be Significant

Did you know that, based on the national average, one year in a nursing home or 24-hour home care can cost more than $66,000 today.[1] With costs increasing at about 4% per year, the annual cost of long-term care could rise to $150,000 per year in 20 years.[2]

What is Your Plan for Long-Term Care?

Long-term care (LTC) insurance can play a critical role in the overall financial planning process, providing a variety of important benefits:

It is the only insurance that covers the costs associated with long-term care, helping you protect your retirement assets for their intended purpose.
It enables you to control where you receive care, including in nursing homes, assisted living facilities, adult day care centers, and home settings - where many people prefer to stay. It's less expensive than you might think. The cost of coverage is based on your age and health when you apply. So the younger and healthier you are, the lower your premiums.
Planning for long-term care is your responsibility, but you don't have to figure it out on your own. To learn about solutions that fit your personal needs, please contact us today at 1.800.793.4422 for more information.

WHY YOU SHOULD NOT WAIT TO BUY LONG-TERM CARE INSURANCE...

◊ Having the ability to comfortably pay for professional long-term care takes the burden emotionally and physically off relatives and friends. A study done by Unum Provident found that 10% of caregivers who take leave to provide care for aging relatives file short-term disability claims within 6 months themselves. This compares with only 4% in the general population.

◊ Purchasing long-term care insurance is very different from obtaining Medicare and Medicare Supplemental insurance. When purchasing a long-term care insurance policy you have to pass through medical underwriting (unless you are offered a group plan through your employer that specifically gives you guaranteed issue rights to some or all of the benefits). If you are already in need of long-term care, you will not qualify for long-term care coverage.

◊ With Medicare, on the other hand, you just sign up when you reach the age of 65 and qualify regardless of your health condition. With Medicare Supplemental insurance, you have many situations where you can qualify for guaranteed coverage.

◊ As we get older, health conditions can suddenly appear and catch us by surprise. While we don’t have to be in perfect health to qualify for long-term care coverage – the younger and healthier we are, the lower the premium and the better our chances of getting approved for coverage.

◊ The underwriting of long-term care insurance is different from that of other types of insurance, such as life insurance. Long-term care insurance companies are most concerned about conditions that could cause impairment and disability down the road. Many women, for example, are surprised to learn that long-term care insurance carriers concern themselves very much with medical histories of osteoporosis and fractures. (Since bone loss occurs naturally after menopause, nobody worries too much about this. But, ladies, we need to.) Osteoporosis is a big cause of limitations to our ability to function. Get checked, take your supplements or medications, and get insured!

BUYING LTC INSURANCE SOONER RATHER THAN LATER

People often ask us what the value is in insuring oneself NOW against the high cost of long-term care, rather than waiting until LATER. It is certainly tempting to consider putting this action off since no one wants to spend money now if delay is possible. But let’s look at the real risks involved in procrastination.

After 20 years in this profession, I can tell you that there have been enormous changes in the policy benefits, the underwriting requirements and the pricing over this time period. And changes are still occurring. We’ve seen underwriting get tougher, especially lately. That means that folks who would have made it through the underwriting process in the past are not making it through with the new guidelines that are in place. This trend is continuing as insurance carriers are doing everything possible to gain rate stability.

Remember -- once you’re approved for LTC insurance, you have a guaranteed renewable policy. The insurance companies must renew your policy as long as you pay your premiums on time. This means your increasing age and possibly declining health won’t affect your premium and they can’t cancel your policy as long as you pay your premiums.

Along that line -- in putting off purchasing LTC insurance one must be aware that changes in one's health may make it impossible to get the coverage or cause it to be much more costly. None of us has a crystal ball on this issue; but I personally have seen too many heart-wrenching examples of folks who waited too long to apply for this insurance and then experienced a health event that rendered them uninsurable. There is no better time to apply than the present.

On the higher cost issue of delaying the purchase of LTC insurance -- it is not just a matter of paying a premium based on an advanced age. One has to figure in the future inflated cost of care and then increase the insured amount to maintain similar fullness of coverage. In addition, there is the very real likelihood that the policy series one was considering will no longer be available - replaced by a newer policy series offered at a considerably higher premium rate. Also, there is no guarantee that the policy benefits in the future will be as generous as those available currently. There has been a noticeable trend toward more basic benefits with less “frills” thrown into the newer policies.

There you have it -- insurability, cost, choice. When you hear people say that they’ll still take the risk and wait because they’ll be paying for the policies for a lot fewer years and so save money that way, let me assure you that it just "ain't" so. Any analysis done on this line of reasoning still shows that over the length of the policy’s life, the person who waited and paid higher premiums for fewer years (if still insurable) would end up paying more on a cumulative basis. The only way to win would be the following situation: you do have a crystal ball and it tells you exactly when you'll need care - then you go and insure yourself one year prior. Neat trick!

WHEN THE TIME COMES TO USE YOUR POLICY...

Since many of our clients are already using their policies, and the time may be nearing for others to begin using theirs, we thought this might be a good time to offer a list of important things to keep in mind if and when that time does come, including the need to review and understand your coverage and how and when to begin the claim process. It is most important to clearly understand YOUR role in getting the claim started so you can be reimbursed for covered expenses...

1. Designate someone to hold your Durable General Power of Attorney (POA) who will act on your behalf if you become incapacitated. This person would be known as your “Agent.” This person may also hold your Durable Healthcare Power of Attorney (frequently created along with your Living Will). These are important positions to have filled in advance of any need. The location of the documents should be known and accessible to the person(s) chosen. In fact, if you haven't executed these legal papers along with an up-to-date Last Will and Testament, why not make a resolution to get these done in the New Year (sooner rather than later). While you're at it, create a list of all your important documents (including your long-term care insurance policy) and related account/policy numbers, and list the location of the original documents so that your “Agent” can step in and easily take over for you if the need arises.

2. Make sure you know how your policy works and what is required in order to get the care you need covered. You can call the insurance carrier directly, or us, to go over your policies by phone.

3. Choose an advocate-guide-manager for yourself before you need long-term care and get to know them. This might be a geriatric care manager who can come into your home now and make an assessment of your living arrangements -- perhaps making suggestions for some alterations to keep you safe and make life easier as you age.

4. Get the claim started immediately when it appears that you are going to need long-term care, even if you are not sure for how long. You, your ”Agent”, or family member can make the call to your insurance company's claims department which, in turn, may trigger a claims in-take call, an assessor to be sent, and/or claims forms to be mailed out to you to be completed by you (or your “Agent”), doctor, and care provider...and all to be returned ASAP.

5. Understand your elimination period -- the days of service or impairment for which you are responsible before LTCI benefits begin. Keep good records beginning with the first day you become impaired and when you start receiving care. Keep copies of all itemized billing statements. This is especially important when receiving home care. In most cases, the insurance companies want licensed home care agencies. You, of course, want to be sure the agency you are going to use is appropriately licensed. Check with the insurance company to be sure. If your policy allows independent home care workers, make sure that any requirements for their use have been met, such as working through a geriatric care manager for oversight and/or supervision.

6. When arranging for facility care, be sure the facility is appropriately licensed. Once a claim is approved for facility care, it is usually smooth sailing. The insurance company has the facility to contact for updates on your impairment and continued residency and the facility might send copies of bills directly to them. You or your designee should still keep copies of all bills from the facility since you are responsible for payment to the facility and you may need to submit copies to the insurance company for reimbursement.

Remember...the policy makes payment to the insured or the insured’s ”Agent” for their benefit, unless payments are assigned to a care provider. Here’s a real good reason to have those POAs executed and ready-to-go. What if a stroke left you suddenly physically incapacitated, unable to communicate and/or cognitively impaired? Your "Agent" can submit a copy of the POA, along with the claim forms, requesting payment come to him/her for your benefit and he/she can then pay the care provider. I feel this mode of operation is preferable to your assigning benefits to a provider. Keep control of the money and know what you’re paying for. You, or the person you designate, should be reviewing the bills from the care providers.

The bottom line...we need to understand our policies and how they work. LTCI policies provide incredible coverage and we need to use them wisely to get the full benefits due.

"Old age will only be respected when it fights for itself, maintains its rights, avoids dependence on anyone, and asserts control over its own to the last breath."

--Cicero, De Senectute

UNDERSTANDING THE VALUE OF YOUR COVERAGE

Those of us who have taken the responsible step of insuring against the high cost of long-term care, while dutifully paying our premiums every year, occasionally lose sight of the incredible protection we have secured for ourselves. Worse still, if we receive the dreaded notice of a premium increase, we get all upset without first examining the protection we have and the value of that protection in terms of today's dollars - what it would cost to replace it with a current policy at today's value.

Take my own insurance, for example. I pay about $1500 per year because I secured the coverage at age 50 many years ago. When I analyzed my policy at age 58, my coverage gave me $177/day because of its compounding inflation rider. This amount will continue to inflate to $518/day when I’m 80 and to $661/day when I’m 85 (which is closer to the time when I might actually start needing care).

If I had decided not to buy LTC insurance and instead saved and invested those premiums to age 85, the amount saved would only pay for about 8 months of care at the cost of $661/day. With my LTC insurance plan, I purchased lifetime coverage which protects me for an unlimited length of time (just in case something should happen in the near term). Even if my premium were to increase by 50% or more in the future, the value of my coverage would far exceed the additional cost.

For example: If I tried to secure a similar policy with equal benefits for myself at age 58 - $180/day with lifetime coverage and compound inflator, at a Standard rate (I was a Preferred rate at age 50) - I’d be paying between $4300 and $6800 in premium annually, depending on the carrier. [Please note: Preferred and spousal/partner discounts can reduce these figures by 10-40%. A shorter policy length, instead of a lifetime benefit, would also significantly reduce the premiums.]

In my particular case, let’s suppose I had chosen to wait 8 years and then purchased that equivalent policy at $4300 per year. Yes, I would have saved about $15,000 in premiums over the 8 years I waited, including interest earned ($1500 x 8 years + interest). However, in a very short time going forward, paying at the higher premium, I would have exhausted all I had saved in waiting those 8 years. The cost, from age 50 to age 85 (assuming I start using my policy at that age), at my original premium of $1500 would be $52,500 paid in premiums ($1500 x 35 years) versus $116,100 if I had waited and paid $4300 at age 58 ($4300 x 27 years). And all this assumes I remained insurable during those 8 years that I might have waited!

So for all who have purchased this coverage, give yourselves a big pat on the back. You have done yourselves and your families a great service!

And for those of you who are still waiting - WHY???

Give us a call at 1.800.793.4422

Plan for your long-term care needs now...and encourage your friends and neighbors to do the same!

[1] Source: Congressional Budget Office, "Financing Long Term Care for the Elderly," April 2004

[2] Source: Based on a rate of inflation of 4.25% of nursing home costs according to the Bureau of Labor Statistics Consumer Price Index. See "Long-Term Care: An Industry in Transition," Fitch IBC, Duff & Phelps, January 18, 2002, posted 9/02.