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Insurance Planning
Primarily in Florida, Personal Services Contracts ("PSK"), which are also referred to as Caregiver Agreements, are widely used as a spend-down tool for Medicaid and Veterans benefits planning.
A PSK generally services four purposes:
It reduces an applicant's countable resources to an acceptable level, which entitles the applicant to receive benefits;
It outlines the duties and obligations of the parties;
It establishes the compensation that will be paid to the caregiver; and
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If your client has a tax-deferred annuity that is causing problems with Medicaid or VA eligibility, it can be easily cashed out. To do so, the client will need to contact the insurance company that issued the annuity and request a complete liquidation. The insurance company will return the annuity's present value, less any applicable surrender charge. The surrender charge is a penalty that applies when an annuity is terminated before its maturity date. The surrender cha ...
The Medicaid and Veterans benefits planning industries are constantly changing. New planning techniques are discovered, old ones become obsolete, new products are introduced, and planning figures are updated annually.
Staying up-to-date on what's happening has never been easier.
For any annuity contract issued after April 22, 1987, it must terminate upon the death of any owner and benefits will then be paid to the designated beneficiary. The death of any owner will trigger the termination of the annuity contract even when the contract is owned by a number of individuals - husband and wife. See Internal Revenue Code ("IRC") § 72(s)(1). However, when a non-natural person owns an annuity contract, then the primary annuitant will be treated as the owner ...
Balloon-style immediate annuities are becoming more and more popular in VA planning. The purpose in using a balloon-style immediate annuity in lieu of a level-pay immediate annuity is to convert excess net worth into a very minimal monthly cash flow. Whether the excess net worth consists of cash, checking and savings accounts, stocks, bonds, mutual funds, cash value life insurance, or an IRA, it can be converted into a balloon-style immediate annuity.
A balloon-style immediate ann ...
Yes, a tax-deferred annuity can easily be converted into a Medicaid Compliant Annuity.
If the current carrier does not provide a Medicaid Compliant Annuity, the tax-deferred annuity can be "transferred" to the desired carrier by way of a 1035 exchange.
A 1035 exchange refers to the section of tax code that allows investors the flexibility to exchange one annuity for another without incurring any immediate tax liabilities. Generally, the surrender of an existing insurance contract is a ...
When a client qualifies for VA and/or Medicaid benefits, an annuity typically becomes part of the planning strategy. So what is an annuity?
Annuities generally come in two forms, either a tax-deferred annuity ("TDA") or a single premium immediate annuity ("SPIA"). A TDA is purchased from an insurance company through an insurance agent, and is designed to pay a guaranteed rate of interest for a set number of years. The TDA remains as a pile of cash, and continues to grow tax ...
When a veteran secures an Aid & Attendance ("A&A") benefit as a result of having long-term care costs, the monthly A&A benefit is dictated by a simple formula - the extent that the claimant's monthly income exceeds the claimant's unreimbursed monthly medical expenses ("URME"). If the individual's monthly income is less than his or her URMEs, the individual's monthly A&A benefit would be $1,644. In the alternative, if the claimant's monthly income exceeds his or her ...
The annuity planning that Krause Financial Services provides in VA scenarios is not to be confused with the planning provided by many self-dubbed "VA Planning Specialists" that have recently created quite the reputation. I always advise that an applicant seek the counsel of an accredited elder law attorney prior to proceeding with any type of plan. Furthermore, I do not advise that the applicant and/or the applicant's family utilize annuity products with inappropriate features - no ...
The advantage of purchasing a partnership Long-Term Care Insurance ("LTCI") policy is that if the insured exhausts all of his or her available coverage, he or she can apply for Medicaid benefits and exclude countable resources equal to the amount paid for care by the LTCI coverage. For example, assume that Alice Smith has a partnership LTCI policy which pays out $350,000 in benefits. The partnership LTCI policy is totally used up. If Alice is in a nursing home when the event ...
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