Sep 13, 2012
Spousal Impoverishment
The expense of nursing home care — which ranges from $5,000 to $8,000 a month or more — can rapidly deplete the lifetime savings of elderly couples. In 1988, Congress enacted provisions to prevent what has come to be called "spousal impoverishment," leaving the spouse who is still living at home in the community with little or no income or resources. These provisions help ensure that this situation will not occur and that community spouses are able to live out their lives with independence and dignity.
Under the Medicaid spousal impoverishment provisions, a certain amount of the couple’s combined resources is protected for the spouse living in the community. Depending on how much of his or her own income the community spouse actually has, a certain amount of income belonging to the spouse in the institution can also be set aside for the community spouse’s use.
Following are the minimum and maximum amounts of resources and income that can be protected for a spouse in the community in 2011:
•Minimum Community Spouse Resource Standard – $21,912.00
•Maximum Community Spouse Resource Standard – $109,560.00
•Maximum Monthly Maintenance Standard – $2,739.00
•Minimum Monthly Maintenance Standard –$1,838.75
Post-Eligibility Treatment of Income
The post eligibility calculation is made to determine how much an individual in an institution (usually a nursing home) is able to contribute to cost of his/her own care. It applies only to individuals who are institutionalized (most commonly to those in nursing facilities) and to certain individuals receiving home and community-based waiver services. The process only applies to those with income and only after their Medicaid eligibility has been established.
The contribution is determined by first calculating the individual’s total income and then deducting certain amounts from that income. Specifically, the individual’s contribution is his or her total income less the following deductions (often referred to as “protected amounts”):
•A personal needs allowance of at least $30;
•If there is a community spouse and the spousal impoverishment rules discussed above apply, a community spouse's monthly income allowance (at least $1,750 but not exceeding $2,739 for 2011), as long as the income is actually made available to the community spouse;
•A family monthly income allowance, if there are other family members living in the household;
•An amount for medical expenses incurred by the spouse who is in the medical facility.
Once the above items are deducted from the institutionalized individual’s income, any remaining income is contributed toward the cost of his or her care in the institution.
Sourse from Medicaid.gov
Mar 25, 2012
Life Insurance Accelerated Death Benefit Riders
Many life insurance policies issued today include an Accelerated Death Benefit Rider . Under an Accelerated Death Benefit Rider, the carrier will pay part of the death benefit to a policy owner if the insured is proven to have an illness anticipated to result in the death of the insured within a specified time period. While the Internal Revenue code allows for life expectancies as long as 24 months, most carriers will trigger the rider only with a mortality period of less than 6 months. The amount of the life insurance death benefit available is determined by the company according to a predetermined formula or percentage of the policy face amount. In general the carriers work to keep their benefits tax free, but tax treatment and program requirements within a company by state.
For a young middle aged family with an upper middle class networth, we can often structure a program using a finite payment plan on a No Lapse Guaranteed Universal Life policy to guarantee both disaster management coverage while the couple is younger, and a guaranteed pool of long term care funding for their final years.
It is generally prudent to consult with a tax attorney and medicaid planning expert before taking an accelerated death benefit disbursement. Even just owning a policy with an accelerated benefit product might affect your eligibility for these programs. In addition, exercising the option to accelerate death benefits and receiving those benefits before you apply for these programs, or while you are receiving government aid, might affect your initial or continued eligibility. You should always check with the Medicaid Unit of your local Division of Medical Assistance and the Social Security Administration.
An accelerated death benefit is not a long-term care policy or nursing home insurance policy. The amount paid out isn’t guaranteed to cover medical, nursing home or other bills. The money you receive can be used for any purpose, and is not earmarked for actual patient care. Unlike conventional life insurance proceeds, accelerated benefits might be taxable.
For a young middle aged family with an upper middle class networth, we can often structure a program using a finite payment plan on a No Lapse Guaranteed Universal Life policy to guarantee both disaster management coverage while the couple is younger, and a guaranteed pool of long term care funding for their final years.
It is generally prudent to consult with a tax attorney and medicaid planning expert before taking an accelerated death benefit disbursement. Even just owning a policy with an accelerated benefit product might affect your eligibility for these programs. In addition, exercising the option to accelerate death benefits and receiving those benefits before you apply for these programs, or while you are receiving government aid, might affect your initial or continued eligibility. You should always check with the Medicaid Unit of your local Division of Medical Assistance and the Social Security Administration.
An accelerated death benefit is not a long-term care policy or nursing home insurance policy. The amount paid out isn’t guaranteed to cover medical, nursing home or other bills. The money you receive can be used for any purpose, and is not earmarked for actual patient care. Unlike conventional life insurance proceeds, accelerated benefits might be taxable.
Whole Life Insurance Policy FAQs
When you think of life insurance the whole life insurance policy is the first type of insurance that comes to mind. It can be considered a staple in the life insurance industry and has been so ever since the concept of life insurance was thought up. The whole life insurance policy is the do all of life insurance. It builds true value and provides benefits that most insurance buyers have not even thought of.
Death Benefit: The whole life policy provides a level guaranteed death benefit which is usually free of Federal Income Taxes. If, however, it is part of your estate it is subject to Federal Taxes. Talk to your accountant or attorney to confirm this. Your death benefit can never be canceled as long as you continue to pay the required premiums.
Premiums: Premiums are guaranteed to remain level. They never increase, except in the case of a modified whole life insurance policy which starts out with a premium that is lower than the actual premium should be.
Cash Values: Whole life insurance policies earn cash values which accumulate tax-deferred. Policy owners can take tax free loans from the cash values of their policies.
Dividends: If these policies are participating life insurance policies they are eligible to earn dividends. Dividends can be used in varying ways.
•Paid Up Additions: Dividends can be used to purchase paid up additions. Each year your dividend can be used to purchase an additional single premium whole life policy which would added to your original policy. This is the option usually used by most life insurance companies if the policy owner does not otherwise elect. Dividends are not guaranteed.
•Cash: Each year your dividend can be paid to you in cash. If this dividend option is elected, each year on the following anniversary, a check will be mailed to the policy owner in the amount of the dividend.
•Premium Reduction: Dividends can be used to reduce premiums. The insurance company will advise you that your premium for that year is less than the premium contracted for. It has been reduced by the dividend. After your whole life policy has been in force for a long time dividends have been known, not only to reduce premiums for that given year, but in some cases to totally eliminate the premium.
•Dividend Accumulation: Dividends can be left to accumulate interest. This is a very good option to use as you can apply the cash to so many things. You can use it to fund college education for children, or may be to pay off the balance of an outstanding mortgage.
Modified Whole Life
•The whole life insurance policy is so flexible that many policies have been derived from it; some of them are quite commonplace today. The policy that is usually referred to as a modified life policy is one for which you would pay a lower premium for about 5 years or so. This was, I believe, especially designed for young people, may be in college, who do not have much free cash, therefore limiting the amount available to pay a life insurance premium. When they graduate, and are gainfully employed, they will have more spendable income and will be able to pay the regular premium.
•Another modification of the whole life policy is the limited payment policy . The policy owner buys a policy for which he only pays a premium for a certain number of years. The 10 pay life is a good example. With this policy the premium payer only pays premiums for 10 years. The face amount of the policy remains level for the entire life of the policy. The policy earns cash values and accumulates dividends just like any permanent life insurance policy.
•Another modification of the whole life policy is the single premium life insurance policy You pay one premium for this policy and never pay another premium for as long as you live. The death benefit remains level throughout. You have cash values and earn dividends like any other whole life policy. Some people like to take care of their important needs and not think about them for a while. This policy would serve that person well.
There are many other variations or modifications to the whole life insurance policy which will not be discussed here as they vary from company to company.
Riders
There are several riders that you can add to your whole life insurance policy that would enhance your benefits.
•Waiver Of Premium
One of the most commonly used riders to the whole life insurance policy is the waiver of premium disability rider. If you should become permanently disabled, while you own this policy, the life insurance company will pay your premiums for you. With most companies you must be disabled for a minimum of six months for the waiver of premium to take effect.
•Accidental Death Benefit
The accidental death benefit rider, otherwise known as the double indemnity rider, affords the policy owner double the death benefit upon his or her death in an accident. If, for example, you are insured for $1,000,000, you selected the accidental death benefit rider, and you should die in an automobile accident, your beneficiaries would receive $2,000,000 from the insurance company.
•Term Life Insurance
Some life insurance companies allow you to add term insurance riders to your whole life insurance policy. Let us say you like the cash value feature of the whole life policy but you need additional death benefit to protect your family you may add a 5 or 10 year term rider or an increasing premium rider to meet that need. When you can put your hands on more cash, or have more spendable income, you can convert the term insurance rider to whole life insurance.
•Living Benefit Rider
If you should become terminally ill and are in need of immediate cash it would be good that you had a living benefit rider on your policy. The insurance company would pay to you a portion of your death benefit before you die.
•Spouse & Child Riders
You could buy term life insurance for your spouse and children separate from your own life insurance policy. Some life insurance companies allow you to add these policies as riders to your whole life policy at a reduced cost.
•Future Policy Purchase Option
As you get older you may find it more difficult to get new life insurance because of the state of your health. Some insurance companies can add a rider to your whole life insurance policy which would allow you to purchase additional insurance in the future regardless of the state of your health.
Death Benefit: The whole life policy provides a level guaranteed death benefit which is usually free of Federal Income Taxes. If, however, it is part of your estate it is subject to Federal Taxes. Talk to your accountant or attorney to confirm this. Your death benefit can never be canceled as long as you continue to pay the required premiums.
Premiums: Premiums are guaranteed to remain level. They never increase, except in the case of a modified whole life insurance policy which starts out with a premium that is lower than the actual premium should be.
Cash Values: Whole life insurance policies earn cash values which accumulate tax-deferred. Policy owners can take tax free loans from the cash values of their policies.
Dividends: If these policies are participating life insurance policies they are eligible to earn dividends. Dividends can be used in varying ways.
•Paid Up Additions: Dividends can be used to purchase paid up additions. Each year your dividend can be used to purchase an additional single premium whole life policy which would added to your original policy. This is the option usually used by most life insurance companies if the policy owner does not otherwise elect. Dividends are not guaranteed.
•Cash: Each year your dividend can be paid to you in cash. If this dividend option is elected, each year on the following anniversary, a check will be mailed to the policy owner in the amount of the dividend.
•Premium Reduction: Dividends can be used to reduce premiums. The insurance company will advise you that your premium for that year is less than the premium contracted for. It has been reduced by the dividend. After your whole life policy has been in force for a long time dividends have been known, not only to reduce premiums for that given year, but in some cases to totally eliminate the premium.
•Dividend Accumulation: Dividends can be left to accumulate interest. This is a very good option to use as you can apply the cash to so many things. You can use it to fund college education for children, or may be to pay off the balance of an outstanding mortgage.
Modified Whole Life
•The whole life insurance policy is so flexible that many policies have been derived from it; some of them are quite commonplace today. The policy that is usually referred to as a modified life policy is one for which you would pay a lower premium for about 5 years or so. This was, I believe, especially designed for young people, may be in college, who do not have much free cash, therefore limiting the amount available to pay a life insurance premium. When they graduate, and are gainfully employed, they will have more spendable income and will be able to pay the regular premium.
•Another modification of the whole life policy is the limited payment policy . The policy owner buys a policy for which he only pays a premium for a certain number of years. The 10 pay life is a good example. With this policy the premium payer only pays premiums for 10 years. The face amount of the policy remains level for the entire life of the policy. The policy earns cash values and accumulates dividends just like any permanent life insurance policy.
•Another modification of the whole life policy is the single premium life insurance policy You pay one premium for this policy and never pay another premium for as long as you live. The death benefit remains level throughout. You have cash values and earn dividends like any other whole life policy. Some people like to take care of their important needs and not think about them for a while. This policy would serve that person well.
There are many other variations or modifications to the whole life insurance policy which will not be discussed here as they vary from company to company.
Riders
There are several riders that you can add to your whole life insurance policy that would enhance your benefits.
•Waiver Of Premium
One of the most commonly used riders to the whole life insurance policy is the waiver of premium disability rider. If you should become permanently disabled, while you own this policy, the life insurance company will pay your premiums for you. With most companies you must be disabled for a minimum of six months for the waiver of premium to take effect.
•Accidental Death Benefit
The accidental death benefit rider, otherwise known as the double indemnity rider, affords the policy owner double the death benefit upon his or her death in an accident. If, for example, you are insured for $1,000,000, you selected the accidental death benefit rider, and you should die in an automobile accident, your beneficiaries would receive $2,000,000 from the insurance company.
•Term Life Insurance
Some life insurance companies allow you to add term insurance riders to your whole life insurance policy. Let us say you like the cash value feature of the whole life policy but you need additional death benefit to protect your family you may add a 5 or 10 year term rider or an increasing premium rider to meet that need. When you can put your hands on more cash, or have more spendable income, you can convert the term insurance rider to whole life insurance.
•Living Benefit Rider
If you should become terminally ill and are in need of immediate cash it would be good that you had a living benefit rider on your policy. The insurance company would pay to you a portion of your death benefit before you die.
•Spouse & Child Riders
You could buy term life insurance for your spouse and children separate from your own life insurance policy. Some life insurance companies allow you to add these policies as riders to your whole life policy at a reduced cost.
•Future Policy Purchase Option
As you get older you may find it more difficult to get new life insurance because of the state of your health. Some insurance companies can add a rider to your whole life insurance policy which would allow you to purchase additional insurance in the future regardless of the state of your health.
Why Buy Paid-Up Additions in Life Insurance?
Paid up additions are bought using the Dividend earned by the base policy. Using these dividends, an insured person has an option to buy an additional policy which will be basically cheaper than buying a new one. Hence, your benefit i.e. the sum insured amount is increased. This helps the insurer by not paying tax for his dividend income and it helps the company too as the dividend what it pays comes back to them.
Paid up additions are a very common dividend option for whole life insurance policies.
When electing the Paid Up Additions (PUA) as your dividend option you use 100% of the dividends being paid out each year to buy you additional blocks of permanent whole life insurance, paid up for life. For example, you received a dividend of $500 in the first year, it might buy you $2,000 of permanent paid up whole life insurance. Therefore, your total amount of life insurance has now increase buy $2,000. The cash value of the policy has only increase by $500, not the full $2,000 of additional death benefit.
As time goes on the dividends increase. This is common of all maturing whole life insurance policies. A more mature policy has a larger cash value and produces more dividends. Also, the additional paid up whole life insurance blocks you are buying throughout your life are also eligible for dividends, so a growing policy will produce larger dividends over time.
As you age, the cost of insurance also continues to up. So, the same amount of money paid out in the dividend 10 years ago will not buy you the same amount of permanent life insurance now. The fact is your annual dividends are increasing faster than your cost of insurance which means that your total amount of whole life insurance tends to accelerate throughout your life, not decline. All I’m trying to say here is that your age cost of life insurance coverage will temper this increasing death benefit. It will always be very healthy and higher than you ever thought possible, but it will never become exponential growth.
The cash value inside a whole life insurance policy is based on the guaranteed cash value which all whole life policies have and a variable cash value. Together they produce the total cash value. The variable cash value amount is based on the cash dividends paid out. As in the example above, if the insurance company pays out a $500 dividend, then your variable cash value increases by $500. As time goes by that $500 helps your policy grow. This is because the total cash value inside a whole life insurance policy increase the amount of dividends paid on that policy in the next year. This is reflective of getting an interest rate on your cash value inside the policy. In effect, the bigger the policy and the larger the cash values, the bigger the returns on that policy the following years, as reflective of an increased dividend.
If you would like to know how you can buy a whole life insurance policy with a guaranteed premium and a growing amount of coverage, we can show you how this is done. Participating in the dividend scale of a life insurance company can be one of the safest and best steady returns in your investment portfolio.
Paid up additions are one of the most common dividend options chosen by whole life insurance policy holders today. It will turn your whole life insurance policy into a high performing, long term growth product which creates substantial wealth for your estate over time.
Paid up additions are a very common dividend option for whole life insurance policies.
When electing the Paid Up Additions (PUA) as your dividend option you use 100% of the dividends being paid out each year to buy you additional blocks of permanent whole life insurance, paid up for life. For example, you received a dividend of $500 in the first year, it might buy you $2,000 of permanent paid up whole life insurance. Therefore, your total amount of life insurance has now increase buy $2,000. The cash value of the policy has only increase by $500, not the full $2,000 of additional death benefit.
As time goes on the dividends increase. This is common of all maturing whole life insurance policies. A more mature policy has a larger cash value and produces more dividends. Also, the additional paid up whole life insurance blocks you are buying throughout your life are also eligible for dividends, so a growing policy will produce larger dividends over time.
As you age, the cost of insurance also continues to up. So, the same amount of money paid out in the dividend 10 years ago will not buy you the same amount of permanent life insurance now. The fact is your annual dividends are increasing faster than your cost of insurance which means that your total amount of whole life insurance tends to accelerate throughout your life, not decline. All I’m trying to say here is that your age cost of life insurance coverage will temper this increasing death benefit. It will always be very healthy and higher than you ever thought possible, but it will never become exponential growth.
The cash value inside a whole life insurance policy is based on the guaranteed cash value which all whole life policies have and a variable cash value. Together they produce the total cash value. The variable cash value amount is based on the cash dividends paid out. As in the example above, if the insurance company pays out a $500 dividend, then your variable cash value increases by $500. As time goes by that $500 helps your policy grow. This is because the total cash value inside a whole life insurance policy increase the amount of dividends paid on that policy in the next year. This is reflective of getting an interest rate on your cash value inside the policy. In effect, the bigger the policy and the larger the cash values, the bigger the returns on that policy the following years, as reflective of an increased dividend.
If you would like to know how you can buy a whole life insurance policy with a guaranteed premium and a growing amount of coverage, we can show you how this is done. Participating in the dividend scale of a life insurance company can be one of the safest and best steady returns in your investment portfolio.
Paid up additions are one of the most common dividend options chosen by whole life insurance policy holders today. It will turn your whole life insurance policy into a high performing, long term growth product which creates substantial wealth for your estate over time.
Jan 15, 2011
A Potential Solution Using Critical Illness Insurance
Critical illness insurance is a source of funds you can use to help cover the indirect costs that arise when a serious illness strikes. By providing money when you need it most, upon diagnosis of a serious illness (as defined in the policy), critical illness insurance can help relieve worry about your finances so that you can focus on getting well.
Critical illness insurance pays you a lump sum of money upon diagnosis of a covered condition. This money is yours to use for any purpose, with no restrictions. For example, critical illness insurance proceeds can be used to pay:
Since the premiums paid for critical illness insurance are not tax deductible, the benefits are not considered as income and are received 100% free of income tax.
Critical illness insurance helps you to survive financially while physically recovering from a serious illness!
Critical illness insurance pays you a lump sum of money upon diagnosis of a covered condition. This money is yours to use for any purpose, with no restrictions. For example, critical illness insurance proceeds can be used to pay:
- Mortgage or rent payments, as well as any other bills you may have;
- Health insurance deductibles, coinsurance and/or co-payments;
- The costs of receiving out-of-network medical treatment, including possible travel and lodging expenses;
- Treatments not covered by traditional health insurance;
- Child care expenses during treatment or hospitalization;
- Modifications to your home or vehicle; and/or Shorter-term home health care.
Since the premiums paid for critical illness insurance are not tax deductible, the benefits are not considered as income and are received 100% free of income tax.
Critical illness insurance helps you to survive financially while physically recovering from a serious illness!
If a Critical Illness Strikes You
Ask Yourself…If a life-threatening illness strikes you:
- How long can you survive financially without a regular paycheck?
- How will your regular bills be paid?
- Will you have sufficient funds available to pay for: Any insurance co-payments and deductibles;
- Alterations to your home and/or automobile to meet any special needs;
- Out-of-town transportation and lodging for medical treatment;
- Additional household and child care expenses;
- Treatments not covered by traditional health insurance; and/or
- Shorter-term home health care during your recuperation?
Special Needs Planning: Legal Planning
In planning for a special needs child, there are four primary legal issues that should be addressed:
- Wills: The primary purpose of a will is to state how you want your assets distributed at your death.
- Guardian: If your child's condition warrants it, careful thought must be given to a future guardian or conservator for your child, after both parents are gone. Guardian of the person may be different from the trustee of financial assets
- Letter of Intent: A letter of intent serves as a blueprint of what you want your child's life to be when you can no longer care for your child.
- Special Needs Trust: A type of trust that can receive and manage assets for the benefit of your disabled child, without disqualifying the child from receiving government benefits. Boilerplate wording from an attorney not experienced in this field will not suffice. Special Needs Trusts should be specific and include exact wording, so as not to disqualify the individual from receiving government support. As your child reaches adulthood, you may lose authority to make decisions for him or her. Items 5 and 6 below provide you with an opportunity to continue assisting your adult child in making appropriate decisions throughout his or her lifetime. Both documents should refer specifically to the Health Insurance Portability and Accountability Act of 1996 (HIPAA). This allows disclosure of medical and hospital records and information to the “agent” and are not subject to federal regulation of privacy rules. Don’t forget to identify “alternate agents” to carry on for you after you are no longer able to do so.
- Power of Attorney: A Power of Attorney is a legal instrument that is used to delegate legal authority to another person, giving that person the authority to make property, financial and other legal decisions for the person who executes the Power of Attorney.
- Medical Directives: In addition to recording the treatments an individual wishes to have or not have should he or she become unable to make those decisions, a medical directive also appoints a proxy…someone to make medical decisions for a person who cannot make medical decisions on his or her own.
Subscribe to:
Posts (Atom)