A New Beginning

There is always something revitalizing about a new year. A chance to set new goals, recommit to old ones, meet new people, and to resolve your growing insurance needs and challenges.

At this time each year, I like to take time to talk a little about what our company accomplished last year and what we hope to accomplish in the coming months. We feel this is important so that our clients are always aware of our ever growing ability to serve their business and personal insurance needs.

2007 was a terrific year. As planned, we implemented a complete computerization of our business. Even though we weren’t without automation before, this transformation was total. It allowed our agency to obtain tools available to the largest of insurance agencies. It gave us the ability to customize service to our clients and document their files in a way that was unimaginable 15 years ago. Further, we can communicate with insurance company’s computers to upload and download policies, endorsements, claims and much more. Even though this transformation was challenging (for some of us), we all made it and are looking forward to 2008 being our first entire year of complete automation.

In addition to that, we were able to add a number of very special commercial insurance markets to our available companies. To be competitive in the commercial insurance product lines, you need numerous quality insurance companies that work with the agency and insured to create the proper insured arrangement. We have that capability even more now, and these companies are now available to our clients and future clients.

In saying good bye to 2007, 2008 becomes another great year of opportunity for our business. We are proud to announce that this is our 20th year in business. That is a very special achievement to us and this could not have been done without the help of you our clients. As the year begins we are entering into a partnership with Nationwide Risk Consulting a national auditing firm that audits workers compensation policies for clients, to see if money can be saved on past policies. The amazing aspect of this service is that NRC only shares in any savings they generate so there is no direct cost to the client for these services. We are excited to bring this service to Minnesota as NRC’s exclusive partner in this region.

In addition, we have enhanced our ability to provide competitive health and other group products. This, along with personal home and automobile coverage, individual health and disability products and financial planning, places us solidly in a position to meet all of our client’s needs; so don’t hesitate to ask. Here is wishing you and yours, health and happiness in the coming year, and thank you once again, for your business.

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The Partnership; A New LTCI Option

Effective January 1st, 2008, Minnesota launches a new “Partnership” with Long Term Care Insurance and Medicaid (recognized as Medical Assistance in Minnesota). The Partnership offers all Minnesotans an exciting new reason to consider Long Term Care Insurance. The government cannot afford to continue funding care for everyone who falls into the Medicaid safety net because of exhausting one’s assets due to long term care costs, so they have created an incentive. The incentive is a conditioned “Long Term Care Partnership” policy, which will protect a portion of one’s assets from the Medicaid spend-down, even after the policy was exhausted. The asset portion that is protected is based on the dollar amount of your Partnership Long Term Care Policy. If, for example, you buy a $300,000 maximum benefit LTC policy, that is what you can protect. In other words, Minnesota promises to raise the “countable assets” for Medical Assistance eligibility to the amount of your LTC benefit amount at the time of application. The Medicaid safety net is still there if one should exhaust their policy benefits, but now a greater portion of one’s assets can be excluded as “countable assets” when applying for MA, as a reward for insuring this long term care exposure.

When Medicaid was signed into law in 1965, the intent was to help poor children and single mothers. In the beginning, the program was structurally balanced. Things changed and non-welfare recipients entered the program, and as demographics changed, the number of taxpaying workers fell while the number of beneficiaries increased. Half of all long term care expense is now paid by Medicaid. In Minnesota, health and human services are the 2nd largest component of the State budget, and is the fastest growing category of State spending. Early studies have estimated that an LTC Partnership program will save state taxpayers as much as $154 million dollars by the year 2030. It makes sense. We insure our homes, cars, businesses, and health; and why not our assets?

The new LTC Partnership Program plan makes sense.

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Long Term Care—It’s part of the deal

With just the utterance of these words, “Long Term Care”, immediate thoughts of a nursing home comes to mind. Who wants to deal with this notion? Of course the answer is “no one”. Yet, this notion is not a fair depiction of this subject. On the contrary, proactively planning for “care” allows for early assistance that is designed to keep you out of full-time facilities like nursing homes. So, while nursing homes may be a chapter on the subject, Long Term Care envelops much more.

For all of us, we basically have three choices when if comes to planning for our Long Term Care:

Pay for it yourself: OK – just grab your chair, because today costs nationally are approximately $200 per day or $72,000 per year. Of course these costs will continue to rise due to inflation and the demand (people living longer and “baby boomers approaching”) that is expected.

Plan for assistance: Either family members helping or taking you in or governmental assistance. In the former case consider the financial and emotional load for your family. In the later case, know that this is called Medicaid (not Medicare) and is a form of welfare. In order to qualify, you must first meet conditions – normally this includes meeting federal poverty guidelines. Without getting into the rules, suffice it to say the government is making this more and more restrictive, and you simply cannot assume you will qualify. Also, planning for this incorrectly may have dramatic financial consequences for spouse or other family members.

Insure against the risk: Long Term Care insurance can either be purchased privately or sometimes through a group plan at your place of work. Both have tax related incentives, and in Minnesota (as well as other states), additional incentives to consider insurance as part of the solution.

Please note that there is not a choice to “do nothing” or ignore the subject. This path is by default either choice #1 and/or #2. Also, planning to die before needing care is in my estimation, ignoring the subject.

For employers, Group Long Term Care insurance plans are quickly becoming more recognized as valued benefits by employees, and worthy of consideration for your group’s retention model. As Group Long Term Care insurance plans are transferable, unlike some other group benefits, Group Long Term Care insurance can add value that carries beyond their working years. Additionally, premiums are generally fully tax deductible by the employer, and the employee.

The average lifetime chance of needing long term care for an individual 65 years or older is more than 40%. It is estimated that approximately 49% of people turning 65 will need LTC at some point in their lives2. As a Financial Advisor, and with these statistics in mind, Long Term Care is a chapter in everyone’s financial plan or future. Whether you have a formal plan or not – It’s Part of the Deal.

Pete Thoresen
Financial Advisor
Focus Financial Network, Inc.
1000 Shelard Parkway, Suite 400
Minneapolis, MN 55426

2. Georgetown University Long-Term Care Financing Project, “Who Needs Long-Term Care?” 2002.
 
Securities offered through Royal Alliance Associates, Inc., Member NASD, SIPC. Advisory services offered through Focus Financial Network, Inc., a registered investment advisor.

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