National Guardian Life First Insurer to Enter U.S. Market In a Decade

The National Guardian Life Insurance Co. is starting to market EssentialLTC, a new stand-alone long-term care insurance policy.

The Madison, Wisconsin-based life insurer is the first insurer to enter the U.S. market for stand-alone long-term care insurance products in more than 10 years. The policy will pay for facility-based long-term care services, such as nursing home care, and comprehensive home and community-based long-term care services.

National Guardian Life, a policyholder-owned mutual insurer, is best known as a seller of insurance policies that help the purchasers cover funeral costs and related costs.

The LifeCare Assurance Co. of Woodland Hills, California, is acting as the administrator for the program.

Long-term care insurance issuers have been struggling with more than decade of low interest earnings on invested assets, poor underwriting results and, in some cases, applications for premium increases of 50 percent or more.

Jim Glickman, an actuary who serves as president of LifeCare, has been active in making the case that the problems with old blocks of long-term care insurance policies are mainly because of the original issuers' lack of understanding of how insureds would behave, and lack of understanding of how long interest rates could stay at very low levels. He has argued that new issuers that enter the market with access to solid long-term care insurance experience data should get much better results.

National Guardian Life says it will use a full medical underwriting process. The process will include a medical exam for applicants ages 66 and older and for some younger applicants.

The company will start by offering a policy with a two-year or three-year benefits period base. Purchasers of the three-year policy can pay to extend the benefit period. A lifetime benefits option is available.

Other options include 3 percent and 5 percent compound inflation protection.

Buyers can make all premium payments for lifetime coverage at once, through a single-pay option; make premium payments for the full period that the coverage is in effect; or pay for lifetime coverage by making annual payments for 10 consecutive years, through a 10-pay payment option.

National Guardian Life is starting by getting the product licensed in the states that participate in the Interstate Compact, a state regulatory group that simplifies the product filing process. The product is now available in Alaska, Alabama, Arkansas, Colorado, Iowa, Idaho, Illinois, Kansas, Louisiana, Maryland, Michigan, Minnesota, Missouri, Mississippi, North Carolina, Nebraska, New Mexico, Nevada, Oklahoma, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Washington state, West Virginia and Wyoming.

Source: LifeHealthPRO, "Long-term care insurance market gets first new issuer in 10 years"

Trust Naming Medicaid Applicant as Co-Trustee Is Available Asset

If planning for long-term care involves Medicaid eligibility planning, the applicant must turn over ownership and control of assets.  Otherwise, the assets will be countable, and the applicant will be ineligible for Medicaid. A most recent example comes from the State of Washington.  A  Washington appeals court recently ruled that a testamentary trust that named a Medicaid applicant as the beneficiary is an available asset because the applicant retained some control over the trust and because the funds in the trust came from either herself or her husband. Matter of Estate of Berto v. State (Wa. Ct. App., Div. 3, No. 33591-7-111, July 19, 2016).

Margaret Berto's husband died, leaving a testamentary trust that named her as co-trustee and the only beneficiary. The trust permitted distributions only at the discretion of the trustees, but provided that Ms. Berto could not be the sole trustee and could not solely determine distributions. Ms. Berto sold her home and deposited some of the proceeds in the trust.

Ms. Berto thereafter applied for Medicaid, and the state counted the trust as an available asset and denied Ms. Berto benefits. Ms. Berto appealed, arguing that the trust was not an available asset because she had limited control over the trust and there were restrictions on distributions.

The Washington Court of Appeals affirmed the state's decision, holding that the trust is an available asset. The court ruled that the trust does not fall under any of the exemptions for trusts in the state Medicaid regulations because "Ms. Berto had some control over the trust and all of the funds came from either her husband or herself."

There is a Shortage of Health Care Professionals Capable of Serving the Elderly Population

There is a troubling shortage of health care professionals specializing in treating and caring for the elderly, according to an article published in Kaiser Health News. This shortage includes geriatricians, physicians who specialize in the treatment of adults age 65 and older, as well as nurses, physical therapists and psychologists who know how to care for this population.

The American Geriatrics Society estimates that the nation will need approximately 30,000 geriatricians by 2030 to serve the 30 percent of older Americans with the most complicated medical problems, according to an article in Health News from NPR. There are, however, only about 7,000 geriatricians currently practicing. To meet the projected need, the society estimates medical schools would have to train at least 1,500 geriatricians annually between now and 2030, or five times as many as last year.

Dr. Todd Goldberg, a geriatrician, recently told Kara Lofton, of West Virginia Public Broadcasting:

“With the growing elderly population across America and West Virginia, obviously we need healthcare providers...The current workforce is inadequately trained and inadequately prepared to deal with what’s been called the silver tsunami — a tidal wave of elderly people — increasing in the population in West Virginia, across America and across the world really.” 

The deficit of properly trained physicians is only expected to get worse. By 2030, one in five Americans will be eligible for Medicare, the government health insurance for those 65 and older.

Dr. Goldberg teaches at the Charleston division of West Virginia University and runs one of the state’s four geriatric fellowship programs for medical residents. Geriatric fellowships are required for any physician wanting to enter the field.

For the past three years, no physicians have entered the fellowship program at WVU-Charleston. In fact, no students have enrolled in any of the four geriatric fellowship programs in West Virginia in the past three years.

“This is not just our local program, or in West Virginia,” said Goldberg. “This is a national problem.”

The United States has 130 geriatric fellowship programs, with 383 positions. In 2016, only 192 of them were filled. 

Fraudulent Transfer Claim Against Nursing Home Resident's Sons Survives

Nursing homes and state departments of Medicaid will become more proficient in developing and implementing techniques to pursue assets in resource recovery over time.  Accordingly, planning techniques must be more, not less, sophisticated.  An excellent exampleof just how devastating simple, self-help, plans lacking in sophistication can be, is the planning of the Nyce brothers.  A U.S. district court recently ruled that a nursing home can assert its case for fraudulent transfer against the brothers, who transferred their mother's funds to themselves, because the claim survived the resident's death. Kindred Nursing Centers East, LLC v. Estate of Barbara Nyce (U.S. Dist. Ct., D. Vt., No. 5:16-cv-73, June 21, 2016).

Roger and Kinsley Nyce were agents under their mother's power of attorney. Their mother, Barbara Nyce, entered a nursing home and signed an admission agreement in which she agreed to pay the nursing home or apply for Medicaid. Ms. Nyce filed for Medicaid, but the application was denied because the Nyce brothers withdrew money from Ms. Nyce's bank accounts to pay themselves. Ms. Nyce also transferred her real estate to her sons. Ms. Nyce died owing the nursing home $137,586.92.

After Ms. Nyce died, the nursing home sued her estate as well as the Nyce brothers individually for fraudulent transfer. The estate cross-claimed against the Nyces, alleging breach of fiduciary duty and conversion. The case was removed to federal court, and the Nyces moved to dismiss the claims. The Nyces argued that the estate couldn't sue for fraudulent transfer after Ms. Nyce died and that the estate's cross claim fits into the probate exception to federal jurisdiction.

The United States District Court, District of Vermont, denied the motion to dismiss. The court held that the fraudulent transfer claim survived Ms. Nyce's death because state law does not require that there be a pending claim in order for an action to survive. The court further holds that the probate exception cannot be used to dismiss widely recognized torts, such as breach of fiduciary duty.

The brothers plan for protecting their mom's assets didn't turn out to be so Nyce. 

Americans Plan Poorly- 72% Do Not Have An Updated Last Will and Testament

A Google Consumer survey by USLegalWills.com suggests that previous surveys may have under-reported the number of Americans without a Will, by not including those who have a Will that is out-of-date. The survey reported that 63% of Americans do not have a Will, showing no real change from 2014. A statistic that was not published before now reveals that am additional 9% of Americans have a Will that is out-of-date. This means that 72% of Americans do not have an up-to-date Last Will and Testament.  The survey revealed that many people have Wills crafted before they were married or had children, meaning, essentially, they have worthless Wills.  

The survey showed a positive relationship between age and the probability of having a Will:

• 18-24: 85% do not have a Will, 10% have an out-of-date Will, and 5% have an up-to-date Will;
• 23-35: 80% do not have a Will, 6% have an out-of-date Will, and 14% have an up-to-date Will;
• 35-44: 67% do not have a Will, 8% have an out-of-date Will, and 25% have an up-to-date Will;
• 45-54: 53% do not have a Will, 11% have an out-of-date Will, and 36% have an up-to-date Will;
• 55-64: 52% do not have a Will, 8% have an out-of-date Will, and 40% have an up-to-date Will;
• 65+: 35% do not have a Will, 15% have an out-of-date Will, and 50% have an up-to-date Will.

When discounting younger adults, only 37% have a Will that reflects their current financial and personal situation.

Shockingly, there is an inverse relationship between income and a person's likelihood to have an updated Will.  Persons with larger incomes are more likely to have a Will that is no longer useful.  The income group least likely to have up-to-date Wills was in the $100,000+ annual income range.  The income group most likely to have up-to-date Wills was in the annual income range of $25,000-$99,999.

There were no significant differences when comparing across gender, region, or urban density.

Graphs of the survey data can be found here.

Source: ABCNewswire, "US SURVEY REVEALS THAT 72% OF AMERICANS DO NOT HAVE AN UP-TO-DATE WILL," last retrieved July 17, 2016.