Long Term Care Insurance May Become a Thing of the Past

It seems that the insurance companies really boggled it when it came to pricing out long term care insurance policies.  Long term care policies have been hit by a triple whammy - historically low interest rates,  policy holders living longer, and policy holders not dropping coverage at the rates the insurance companies expected.

Some of the huge insurance carriers have washed their hands of the whole situation and have left the market.  Prudential Financial, Inc. announced earlier this month it would stop selling long term care policies to the individual market.  MetLife ended sales of  long term care polices in 2010.  Unum announced In March 2012 that it would discontinue sales to employees of corporations.  Over the past 5 years, 10 of the 20 largest writers of long term care have exited the market.

John Hancock, one of the top 5 largest writers of individual long term care policies isn't exiting the business, but is actively trimming its book of business as it is asking each state to allow it to hike the premiums for existing customers by an average of 40%.  Elderlawanswers.com reports that in one case an Illinois couple received a premium increase showing a 90% hike, from $3893.40 a year to $7385.52 per year (see The Chicago Sun-Times).  

I find this a bit outrageous.  The policy-holders have paid into their policies all these years and held up their end of the bargain - I pay you money today, and you pay me money tomorrow if I get sick and meet all of your other requirements.  It looks as if the insurance companies are fearful that, oh no, the policy holders might actually (gasp) try to collect on the insurance polices for which they have been dutifully paying their premium all these years.  So, to prevent that from happening, we will tell people that are living on a fixed income (which also hasn't seen any increases due to the low interest rate and inflation environment) that they will either pay up to 90% more, or we will cut them off and all that money that they spent will be for naught.

Now I am not saying the insurance companies can't do this, of course they can, it's in the contract.  What I am saying is that it is the insurance companies, the experts in defining the risk the themselves, who made the "bad deal", and they are the only ones who profit, because they got all those premiums and never had to pay out on all the people who will be forced to cancel their coverage.

As a taxpayer, I find this particularly disturbing, because there are 3 ways to pay for long term care - you money, long term care insurance, and Medicaid.  In this situation the people who tried to plan for their own care by getting long term care insurance, which is precisely what we as a society would like people to do - plan for their own needs - are going to end up dropping coverage and perhaps ending up needed Medicaid to pay for their care.

As an attorney, I counsel people to consider long term care as a responsible investment in their future.  I don't sell it, I don't get compensated in any way when somebody else sells it, but I have seen families have oodles of more options when dealing with long term care issues when those very high costs can be offset by new dollars coming in.  I just can't help but feeling that the stupendous increase in premiums is like the trick where you try to pull the tablecloth off the table, but everything comes crashing down.

Image: sscreations / FreeDigitalPhotos.net


Estate Administration - The 3 Stages

While each estate administration presents different facts - the terms of the Will or Trust, the amount and composition of the assets, each estate in New Jersey goes through the same 3 stages

·         Probate.  The first stage is when the Will is offered for probate at the local Surrogate’s Court.  This is a very simple process in which your executors present the Will, and then they are issued Letters of Testamentary, which will give the Executor(s) the authority to carry out your wishes as set forth in your Will.  This is done by making an appointment with the Morris County Surrogate’s Court (10) ten days after the date of your death.  Alternatively, if the Executor(s) decide to attain an attorney to assist them, the attorney’s office can often have the documents signed at their office. If there is no Will, an Administration is opened where your Administrators are issued Letters of Administration.  Letters Testamentary and Letters of Administration give your representative the power over your assets and to settle any liabilities.

·         Gather Assets; Pay Liabilities.  The second stage is gathering together all your assets, determining their value, paying any debts or liabilities (including taxes if any) and filing any necessary tax returns.  Until the tax returns are filed and approved (or a waiver is completed because no taxes are due) New Jersey has a lien on your assets and they cannot be fully distributed. 

·         Closing the Estate.  Once the tax returns are approved, New Jersey will issue a Waiver, which releases its lien on the assets.  The Executor then normally accounts to the beneficiaries what came into the estate, what went out, and what is left to distribute.  This informal accounting is coupled within a “Release and Refunding Bond” where the beneficiaries agree to their distribution, waive any claim to be entitled to more, and release the Executor from liabilities.  The accounting and “Release and Refunding Bonds” will act to close the Estate.  You should anticipate that the entire Estate Administration process will be a 14-24 month process.

The Executor/Administration has many responsibilities beyond these.  We find that since people are generally taking on the job of Executor/Administrator for the first time, it appears overwhelming.  By looking at the job in stages, it becomes more manageable and doable.  Many Executors/Administrators seek professional advice because even if they can consider the job in stages, their lack of experience in that role, and not knowing their responsibilities and questions to ask, potentially opens them up to liability and claims from the beneficiaries or tax authorities. 

NJ Medicaid Key Figures - 2012

The key figures for Medicaid eligibility are updated frequently.  These figures will determine if a person qualifies for long term health care to be paid under Medicaid, as well as what assets a spouse can maintain if one spouse enters a nursing home.  These figures change frequently, some on an annual basis as a result of inflation, and other by administrative action.  Unfortunately, they are not broadcast by the Department of Human Resources as frequently.  Here is where they stand as of January 2012:

New Jersey Medicaid Reference – January, 2012

Minimum Community Spouse Resource Allowance

$  22,728

Maximum Community Spouse Resource Allowance


Resource Allowance for an Individual

$    2,000

Resource Allowance for a Couple

(both husband and wife in a nursing home)

$    3,000

Minimum Monthly Maintenance Needs Allowance

$    1,839

Maximum Monthly Maintenance  Needs Allowance

$    2,841

Monthly Personal Needs Allowance

$         35

Standard Utility Allowance

$       435

Divestment Penalty Divisor

$    7,282

Income Cap Amount

$    2,094

Home Equity Limit



If you have questions about New Jersey Medicaid eligibility you can contact Stacey C. Maiden, Esq. at smaiden@feinsuch.com.


IRS Offers New Help to Struggling Taxpayers - Fresh Start for Federal Tax Liens

Tough times are all around, and apparently the IRS recognizes this as well.  The IRS recently announced a series of new initiatives to " to help individuals and small businesses meet their tax obligations, without adding unnecessary burden to taxpayers. "

The changes center around how the IRS files liens against taxpayers for failure to pay their taxes, and include 5 key provisions:

  • Significantly increasing the dollar threshold when liens are generally issued, resulting in fewer tax liens.  This is being done to address inflation.
  • Making it easier for taxpayers to obtain lien withdrawals after paying a tax bill.
  • Withdrawing liens in most cases where a taxpayer enters into a Direct Debit Installment Agreement.  This will apply to taxpayers with $25,000 or less of unpaid taxes, interest and penalties who have entered into a payment plan with the IRS.  You can see a video about the Direct Debit Installment Program here.
  • Creating easier access to Installment Agreements for more struggling small businesses.  This will be done by increasing the program participation threshold of unpaid  taxes, interest and penalties from $10,000 to $25,000.
  • Expanding a streamlined Offer in Compromise program to cover more taxpayers.  The income limits will be increased to $100,00, and the tax liability threshold doubled from $25,000 to $50,000.

A federal tax lien is a tool of the IRS whereby they have a legal claim to the property of a taxpayer who has not paid their taxes. It includes all property owned by the taxpayer at the time filed or after acquired.  Needless to say, a federal tax lien dramatically decreases your credit worthiness.

Questions on addressing federal tax liens are handled through the Firm's Tax Department, or complete a request for more information to the right ------>

Points to Consider with Continuing Care Retirement Community (or other senior housing options)

You are into your retirement, selling your home because "it is getting to be too much" and looking at different housing options.  One considerations needs to be "Can I easily be cared for in my new home if I get sick?".  Stacey C. Maiden, Esq., of Counsel to our Tax, Trust & Estates, and Elder Law Department has put together some points to consider if one of those housing options includes a Continuing Care Retirement Community or CCRC.

There are a number of housing options for seniors outside of staying at home or moving in with adult children, such as 55-Plus communities, Assisted Living Communities, Skilled Nursing Facilities.  Another senior housing option is the Continuing Care Retirement Community (CCRC). 


CCRCs combine housing, supportive services and health care, all within a campus or country club like setting. Residents of a CCRC enter into a lifetime lease with the facility and receive a continuum of care, and residency levels include Independent Living (IL), Assistance-in-Living Services and Skilled Nursing.  The services and lifestyle a CCRC offers may meet you or your loved one’s needs.  But how do you know that the CCRC you are looking into moving to is the right place?      

Clyde Sutton, LNHA, the Associate Executive Director of Harrogate in Lakewood, New Jersey, recent;y gave an excellent and informative presentation on CCRCs to the Estate and Financial Planning Council of Central New Jersey.  Below, with Clyde’s permission, is a helpful summary of what a prospective resident should research and question when considering relocation to a CCRC (or any other senior living facility). 

q    Costs

q    Are taxes/utilities included?

q    Services/amenities

q    Does the facility offer Home Care services?

q    Maintenance costs

q    Financial health of the facility/Credit ratings

q    Safety and security systems

q    Does the community offer flexibility or choice?

q    Staffing levels and certifications

q    Social life and activities

q    “Life care”

q    Condition of physical plant

q    Capital Budgets

q    Landscaping

q    Are pats Allowed

q    Single facility or chain?

q    “For Profit” or “Not for Profit”

q    What is the size of the community?  How many residents?

q    Resident involvement/committees

q    Ratings and Survey results (advisory standards)

q    Insurance (Facility, LTC, Medicare, Health)

q    Tax benefits

q    “Disclosure Statement”

q    Visit property, sample food, talk to residents

From Clyde Sutton, LNH, Associate Executive Director, Harrogate, Inc., Lakewood, NJ.  www.harrogate-lifecare.org