Transcript Slide 1

Long Term Care Insurance as a Benefit
Presented to:
Presented by:
Long Term Care Insurance as a Benefit
124025 02/09/12
©2012 Genworth Financial, Inc. All rights reserved.
Overview
1
Need for Long Term Care in the Workplace
2
Benefits for Employer and Employee
3
Deductibility of Premiums
4
Long Term Care Insurance and How It Works
5
About Genworth
6
Next Steps
Long Term Care Insurance as a Benefit
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1
Need for Long Term Care
in the Workplace
Primary Concerns
An extended care “event” may have a dramatic impact on an
individual’s retirement portfolio, as well as his or her family.
“
How will I handle unexpected
extended care expenses?
Will I have enough income to sustain
my lifestyle in the future?
Long Term Care Insurance as a Benefit
”
4
People are living longer
Average life expectancies continue to improve.
Source: Population Reference Bureau, 2009 World Population Data Sheet, 2009.
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The need for extended care is a reality.
47
2 3
3.9
People over 65
who will require
long term care
Average length
of majority
of long term
care claims
out
of
people
1
years
to
years
2
Average life
expectancy
after Alzheimer's
diagnosis
after age 70
1 Source: U.S. Department of Health and Human Services National Clearinghouse for Long Term Care Information Website, May 2010
2 Source: Genworth Financial Claims Data, December 2010
3 Source: National Institute on Aging, National Institute of Health, 2/09
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Extended care is expensive today…
Cost of care for one year in the United States
[$77,745]
[$43,472]
In-Home Care
[$39,135]
Assisted Living
Nursing Home
(44 hours/week)
(private room)
Source: Genworth 2011 Cost of Care Survey, conducted by CareScout ®, April 2011. Based on national median costs.
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...and will be even more expensive
15 years from now
[$153,930]
Future cost of care for one year in the United States*
[$86,072]
[$43,472]
In-Home Care
[$77,485]
[$39,135]
Assisted Living
Nursing Home
(private room)
(44 hours/week)
Source: Genworth 2011 Cost of Care Survey, conducted by CareScout ®, April 2011. Based on national median costs.
* Estimates how much care might cost based on 5% annual inflation.
Long Term Care Insurance as a Benefit
[$77,745]
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Myths and Reality
Myth: “It won’t happen to me.”
Myth: “My insurance already covers this.”
Myth: “The government will pay.”
Myth: “I can pay for it out of my savings.”
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2
Benefits for Employer and Employee
Benefits for Employer
• Can Provide a Tax-Advantaged Benefit for Themselves
• Attract, Reward and Retain Quality Employees
• Reduce Employee Time Off
for Extended Care Issues
when Spouse and Family
Coverage is Offered
• Reduce Loss of
Employee Productivity
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Benefits for Employee
• Help Protect Retirement
Income Stream and Lifestyle
• Certificate Portability
• Extended Family Coverage
when Available
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3
Deductibility of Premiums
LTCI as an Executive Benefit: The Abilities
• Select-ability
• Spouse-ability
• Deduct-ability
• Port-ability
You should always consult
with your legal and tax
advisors regarding the tax
consequences of paying long
term care insurance premiums
through a business.
• Discount-ability
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C-Corporation Deductibility
• Employer deducts premiums for tax-qualified LTCI policies
on employees, spouses and legal dependents
• Premiums paid by employer are not included in employee’s
taxable income
• Policy benefits not included in recipient’s taxable income
• Owners actively at work in the corporation are generally
considered stockholder-employees
• Select class of employees defined by employment, not
ownership
• “Ten Pay” opportunities
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2012 Deduction For LTCI Premiums
Attained Age Before Close
of 2012 Premium Limit
Taxable Amount
40 or younger ..…………...…….. $350
41 through 50 …..……...……….. $660
51 through 60 ……………….... $1,310
Maximum medical expense
claim for qualified long term
care insurance premiums
under IRC Section 213(d)(10)
Long Term Care Insurance as a Benefit
61 through 70 …..…………….. $3,500
71 and older …….…………….. $4,370
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S-Corporation Deductibility
• Premiums attributed to each greater than 2%
shareholder-employee included in their income
• Greater than 2% shareholder-employee deducts lesser
of actual premiums paid or eligible long term care premium
• Policy benefits not included in recipient’s taxable income
• Select class of employees defined by employment,
not ownership
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Partnership Deductibility
• Partnership pays premiums for LTCI policies covering active
partners and spouses
• Premiums attributed to each partner included in their income
• Partner deducts the eligible premium (lesser of combined
actual premiums or age-based limits)
• Benefits are not included in recipient’s taxable income
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Limited Liability Company (LLC) Deductibility –
If LLC Elects Partnership Tax Treatment
• LLC owners are called “members”
• LLC pays premiums for LTCI policies covering active members
and spouses
• Premiums attributed to each member included in their income
• Member deducts the eligible premium (lesser of combined
actual premiums or age-based limits)
• Benefits are not included in recipient’s taxable income
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Long Term Care Insurance
and How It Works
What is Long Term Care?
• Due to accident, illness or severe
cognitive impairment
• Care to provide for yourself
(activities of daily living)
• Expected to last 90+ days
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Benefit Eligibility
Triggers to Qualify for Covered Benefits:
Help Is Needed With at Least 2 of the 6 Activities of Daily Living
and Expected to be Needed for at Least 90 Days
 Bathing
 Toileting
 Dressing
 Transferring
 Continence
 Eating
OR
- Severe Cognitive Impairment
(e.g., Alzheimer’s disease)
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How Does Long Term Care Insurance Work?
It provides a “Pool of Benefit Dollars” for long term care
when and where needed.
Benefit
Dollars
Home Care
Assisted
Living Care
Nursing
Facility Care
*Does not count against coverage maximum
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Care
Coordination
Services*
Designing Coverage
• Monthly Maximum
• Benefit Multiplier
• Elimination Period
• Inflation Protection
Example
Monthly Maximum
Benefit Multiplier
Coverage Maximum
$4,500
x 60
$270,000
$270,000
“Pool of Benefit Dollars”
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Employer Paid
Executive Series
Funding
100% Employer-Paid for Employee.
Employer-Paid for Spouse.
Minimum Participation
Minimum 7 Submitted & Issued
Employer-Paid Employee Lives
Underwriting
Employees:
• W2 Employees and Spouses Age 18
and Older, Actively at Work 30+ Hours,
During Initial Enrollment
Long Term Care Insurance as a Benefit
• Maximum Benefit Limits: $9,000 per
Month & 5-Year Benefit Period
• Short Form, Simplified Underwriting
All Others:
• Long Application, Full Underwriting
Applicable Discounts
• No Preferred Health Discount
• Partner / Spousal Discounts Applicable
(40% 2 apply/2 issued,
25% 2 apply/1 issued)
• 5% Multi-Life Discount (taken after other
discounts are applied)
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LTC
Business
Solutions
Program
Simplified
Underwriting –
Three Questions
1
2
INSURABILITY PROFILE
3 QUESTIONS:
1. ADL
2. Specified Conditions
3. Height / Weight
3
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Employee Paid
Employee Advantage
Funding
100% Employee-Paid
Minimum Participation
Minimum 7 Submitted & Issued
Employee Lives
Underwriting
Employees:
• W2 Employees Age 18 and Older,
Actively at Work 30+ Hours, During
Initial Enrollment
• Long Application, Full Underwriting
Long Term Care Insurance as a Benefit
• Preferred Health Discount Applicable
with “No” Tobacco Usage
All Others:
• Long Application, Full Underwriting
Applicable Discounts
• Preferred Health Discount (20% for
singles, 10% for couples)
• Partner / Spousal Discounts
Applicable (40% 2 apply/2 issued,
25% 2 apply/1 issued)
• 5% Multi-Life Discount (taken after
other discounts are applied)
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Employer and Employee Paid
Employee Plus
Funding
Buy Up Paid by Employee:
Employer and Employee-Paid
•Long Application, Full Underwriting
Minimum Participation
Minimum 7 Submitted & Issued
Employer-Paid Employee Lives
Underwriting
Employer Paid Employees and
Spouse/Partner:
•W2 Employees Age 18 and Older,
Actively at Work 30+ Hours, During
Initial Enrollment
•Maximum Benefit Limits: $9,000
Month & 5-Year Benefit Period
•Short Form, Simplified Underwriting
Long Term Care Insurance as a Benefit
All Others:
•Long Application, Full Underwriting
Applicable Discounts
•Preferred Health Discount (20% for
singles, 10% for couples) on buy up
portion or total voluntary portion
•Partner / Spousal Discounts
Applicable (40% 2 apply/2 issued,
25% 2 apply/1 issued)
•5% Multi-Life Discount (taken after
other discounts are applied)
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Benefit Options
• Shared Coverage with Joint Waiver Rider
• Home Care: 50%, 75% & 100%
• Service or Calendar Day Elimination Period
• 0 Day Home Care Elimination Period
• Inflation Protection*: 3% & 5% Compound, 5% Equal,
Future Purchase Option
• Nonforfeiture Benefit
• Restoration of Benefits
*Inflation Protection benefits affect the availability of state long term care partnership asset protection. Check state availability for specific partnership programs.
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5
About Genworth
About Genworth
Genworth Financial Overview
Genworth’s LTC Business*
• A Leading Financial Security
Company in the U.S., with an
International Presence
• #1 Provider of LTCI
• Serving More than 15 Million
Customers
• Nearly $2.0 Billion Premium in Force
• More than $100 Billion in Assets
• Global Operations in 25 Countries
•
CareScout®
Programs & Services
• Nearly 1 in 5 LTCI Insureds Have
Genworth Life Coverage
• 37 Years of Experience
Genworth’s LTC Operations**
• Over 1 Million Policyholders
• Over $7.7 Billion in Claims Paid
• Multiple Long Term Care Solutions
*LIMRA Individual Long Term Care Insurance 2010 Sales and In Force
**Genworth Business Operations Data 12/1974-12/31/11
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Next Steps
Next Steps
• Determine Type of Program to be Considered
• Complete Employer Paperwork
• Review Implementation Strategies and Determine Timelines
• Offer Long Term Care Insurance as a Benefit
Long Term Care Insurance as a Benefit
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Content referring to Long Term Care Business Solutions provides
information on Group Long Term Care Insurance available from Genworth
Life Insurance Company. It is not a contract for insurance. Coverage under
the Group Policy is intended to be qualified long term care insurance under
federal tax law (IRC 7720B). As the Group Policyholder, the employer will
receive a Group Policy (the contract of insurance) that sets forth the terms
and conditions of coverage, eligible classes, and the premiums associated
with the Group Program available to those persons eligible for coverage.
Coverage is subject to the underwriting requirements of Genworth Life
Insurance Company.
Each eligible person who becomes insured will receive a Certificate of
Insurance. The Group Program is provided under policy form series 7050
and governed by the state in which the Group Policy is issued.
State variations apply for those states that have extra-territorial authority.
All coverage maximums include combined coverage from all other carriers.
Long Term Care Insurance as a Benefit
The tax information in this material was written to support the promotion
and marketing of the contract. The Genworth Financial companies and
their representatives and distributors do not provide tax or legal
advice. We did not write this material for use by any taxpayer to avoid any
Internal Revenue Service penalty. Clients should ask their independent tax
and legal advisors for advice based on their particular situation.
Long Term Care Insurance products are underwritten by Genworth Life
Insurance Company and, in New York, by Genworth Life Insurance
Company of New York. Administrative office: Richmond, Virginia.
Long Term Care Insurance as a Benefit