Legal landscape changes for long-term care insurance.

With the passage of the Deficit Reduction Act of 2005, long-term care insurance is poised to become the next generation benefits perk for executives and America's workforce.

The act has single-handedly, brought to the forefront the need for families and business to focus on long-term care planning. The act changed Medicaid law, making it more difficult for individuals to qualify for Medicaid benefits for long-term care services. Medicaid was designed to provide benefits for the needy and those without insurance. Because there has been a long history of affluent individuals qualifying for the program through a series of asset transfers, the system has been overwhelmed and near the breaking point. The changes in this act were designed to overcome these practices.

The major changes are:

* Increasing the "look-back" period for asset transfers from three to five years

* Change in the penalty period start date from the asset transfer date to the date of application for Medicaid

* Disclosure of annuities to require notification to the state of all transfers within the last five years and to name the state a remainder beneficiary

* The new law mandates the "income-first rule" regarding how the community (the healthy spouse) receives his or her monthly stipend

* Primary residences with a value greater than $500,000 equity will enable Medicaid to deny benefits for those applicant-owners

* Allowing the state to create a partnership program that protects dollar-for-dollar assets equal to long-term care insurance policy benefits

These are just a few highlights of this legislation. The important point to consider is that Medicaid now becomes a safety net for those it was entrusted to care for--the truly needy.

According to the National Center for Health Statistics, nearly half of us will require long term care, which could be anything from ongoing nursing, social, rehabilitative or personal care or services provided in a nursing home, our own homes, or an assisted living facility. If it doesn't happen to us, it might happen to someone we know--a spouse, a parent, a neighbor or a co-worker.

It is a situation none of us wants to contemplate. Unfortunately, many people remain unaware of the potential financial and personal impact of long-term care expenses on their families and themselves.

Americans can no longer rely on others to fund long-term care services. Modern medicine and innovations in medical technology are enabling us to live longer and, in many cases, it prolongs our dying.

Employees are now looking to their employers for help. Benefits administrators have new programs which can address these needs. They can design an executive carve-out program, which provides long-term care benefits to key employees and their spouses, classes of employees based on years of service or levels of management. They can offer voluntary plans to all employees, their parents and grandparents. Plan designs are limitless and can be customized.

They can have simplified or guaranteed underwriting for those with health issues. Some plans can be designed to be paid up during working years.

For these reasons, long-term care planning is essential to help us preserve and protect our hard-earned nest eggs. Fear of exhausting our retirement savings is becoming the most vital concern for retirees.

Roberta H. Brayer, long-term care marketing specialist for Penfacs Financial Group, is chair of the Association of Health Insurance Advisors. She can be reached at 893-3565, ext. 19 or [e-mail].