Americans can now exclaim “Eureka” when it comes to finding the cash to fund today’s top Long-Term Care solution, The ROP LTC Plan.
By David T. Phillips, CEO
Estate Planning Specialists
“Eureka” was a word of excitement that the California 49ers would shout out when finding a rare gold nugget. Americans can now exclaim “Eureka” when it comes to finding the cash to fund today’s top Long-Term Care solution: The Return of Premium Long-Term Care Plan.
Universally, everyone that honestly examines the new ROP LTC Plan concludes that it makes fiscal and logical sense. The one obstacle that seems to interfere in the acquisition process is one’s inability to find the cash resources to fund it.
Well now thanks to Uncle Sam and The ROP LTC Plan’s unique design, you can use “pre-tax dollars to fund it.” That’s right, tax deductible dollars can be transferred from a tax deferred account to fund a plan that generates a “Tax-Free” monthly long-term care benefit. It doesn’t get any sweeter than that.
Let me explain.
In 2003 Congress created The Health Savings Account (HSA). Recent favorable HSA amendments now allow for HSA funds to be used to pay for long term care insurance as a qualified medical expense. Since the ROP LTC plan is comprised of two parts: the life insurance and the tax qualified LTC portion, the LTC portion can be funded with non-taxed HSA dollars.
And that’s a “Eureka” moment for those that can qualify for the ROP LTC Plan but have been wondering where they can find the money to fund it. Let me give you an example: Howard is age 62, he currently has $35,000 in his HSA account. He qualifies for The ROP LTC Plan and decides he wants to deposit $15k annually for 7 years to fund his plan. He immediately creates a Long-Term Care pool of $284,717, 19 times the initial transfer. Because he includes the 5% compound inflation option, by age 80 his pool will increase to $685,205, payable TAX FREE over 72 months. He will also have a life insurance benefit of $105,000.
A closer look at Howard’s 7 year deposit of $15k finds that $7,364 is used to fund the paid up life insurance policy and $7,636 to fund the LTC portion which can come from his HSA account up to the age based maximum deduction of $4,220 set by the IRS, (see table). Howard will fund the $15k annual premium each year by writing two checks: one from his tax-deductible HSA for $4,220 for the 7 years, and the other for $10,780.
Over the 7 years Howard will fund his ROP LTC plan with 28% pre-tax dollars. Should he ever trigger the LTC benefit, it will be paid out with 100% TAX FREE dollars making it all the more reason for him to yell out…….Eureka!
To receive your own personal example of how the ROP LTC would work for you, and how much can be funded from your HSA account, call our offices today at 1-888-892-1102 and schedule a time to talk to Todd or myself.
By David T. Phillips, CEO
Estate Planning Specialists Because you recently asked me to send you our Special Report on the new Return of Premium Long Term Care Plan I wanted to share with you a conversation I had the other day with a client when telling her the good news that she was approved for coverage.
Bonnie (not her real name) is a single, 58 year old nurse from Michigan. She called us a few weeks ago, after reading about my firm and The ROP LTC Plan in Bob Carlson’s Retirement Watch newsletter. After a series of discussions and illustrations, she completed an application and the interview with the underwriter. She was now approved and it was time for her to transfer the funds to bind her coverage.
While these are not her exact words, this was the gist of our conversation:
“Thank you David for making this happen. With my ROP LTC Plan, I now have options. Before today, I really only had one option, and that was to hope my savings and retirement plans lasted through any long term medical situation I might experience. I mean, as I nurse I have seen it all. I know firsthand that anything can happen.Now with my ROP LTC Plan in force, I have options.
Let’s say, 10 years from now, I slip and fall on the ice and find myself disabled. Since my ROP LTC has an Indemnity pay out after 90 days, I will have plenty of tax-free cash to do as I please.If I want to have my friend Charlotte move in and take care of me, I can.
If I want to relocate to Florida so my daughter can watch over me, I can. And in both cases I can pay them a tax-free salary, from the cash I will receive from my ROP LTC Plan.
If I want to stay here in my home in Michigan and have a professional care giver take care of me, I can. In that case I will be able to use the tax-free cash from my ROP LTC Plan to pay for my care and will not be forced to deplete any of my other assets.
If I want to move to “Friendship Village” and have them take care of me, I can use the cash from my ROP LTC Plan to pay for it.Point is David, I have options, plenty of them. Before I talked to you, I really only had one option and that was to spend down all of my cash first, then sell off everything else.
Now I have endless options. And what’s more,
it really isn’t costing me anything.
I just transferred $100k from a silly CD that was set aside to pay for a potential LTC event. Now I am initially leveraging that $100k by a factor of 3, and because I have included an inflation rider that factor will increase as high as 6 times.
Furthermore, if I get lucky and am one of the 20% that miss the LTC train, all of my deposit is returned to my ultimate beneficiaries at my passing. It is just like you said when I first called you. I transferred my CD funds from my left pocket to my right pocket and the money is still on my balance sheet, but now I have options.
All it is costing me is the use of that CD money through the years and SO WHAT. I was hardly earning any net after-taxed interest anyway. And had I invested it in the market when it came due, chances are I probably would have lost it anyway.
Now I have options – so many options.
David, I can’t imagine why everyone else doesn’t jump on this opportunity while they can.”
Bonnie absolutely gets it and she is right! Everyone should know about the leverage and benefits of the ROP LTC Plan and the peace of mind it creates.
With the ROP LTC Plan, Bonnie is confident in her future and doesn’t worry about tomorrow. Best of all, since every aspect of her ROP LTC Plan is completely guaranteed, she will NEVER have to worry where the cash is coming from to take care of her, should her LTC train arrive at the station.
Your first step is for you to find out for yourself what your ROP LTC Plan would look like should you reposition some of your assets. We have included the attached downloadable ROP LTC Analysis Request Form for your convenience. Simply send us your completed form or CLICK HERE to submit your Request online and we will send to you at no cost your personalized ROP LTC Summary.
Feel free to call our office if you have any questions – 1 888-892-1102
Many of our clients have qualified assets (IRA/401k, etc) they intend to use for retirement income. However there is one unknown factor that could unwind the best laid plans – Long Term Care (LTC) expenses.
The most prudent way to insulate these precious funds is to implement what we call The IRA Leveraged LTC Strategy (IRA LLTC Strategy). Simply stated, with the IRA LLTC Strategy you transfer a portion of your “Qualified” funds, like your IRA into a special income annuity known as a 10-year Certain Immediate Annuity. Then annually for 10 years, you transfer the Annuity income into the Return of Premium LTC plan. Fully funding guaranteed Long Term Care protection that will leverage your transferred IRA up to 10 times!
Because the income generated from the Immediate Annuity will be taxed annually as a “Qualified” distribution, income taxes will be due April 15th of the year following the distribution. However, considering that you would have had to pay taxes on the IRA distribution down the road at potentially higher tax rates, and the immense leverage you generate, the small conversion tax you pay to obtain the IRA LLTC Strategy today is well worth it.
Allison, 60, is in good health and married. She is concerned about Long Term Care after seeing how those expenses impacted her parents’ retirement plans. Allison’s parents thought they were all set, (and they were), until extended care expenses depleted their savings.
Allison’s father passed away first after a long illness. His extended LTC expenses significantly impacted her mother’s plans. You see she had hoped to travel with her friends after her husband’s passing, but because most of their retirement money was spent on his care, her plans took a back seat. Then to make matters worse, her mother had three years of LTC expenses of her own. The money she was hoping to leave her family evaporated. It was gone.
This was a wake-up call for Allison. After discussing her situation with us, she decided an ROP LTC Plan would best fit her needs. She really liked the flexibility and simplicity of the Tax-Free Cash Indemnity monthly payout. With no restrictions on how LTC benefits can be used, Allison will be able to use her tax free cash to pay for a variety of needs that may not be covered by the typical reimbursement LTC policy. Benefits such as using her monthly payout to cover the costs of informal care from an immediate family member, or hiring less expensive and potentially more accessible unlicensed caregivers.
After getting approval for her Return of Premium LTC plan, she transferred $100,000 from her IRA into a 10-year Certain Income Annuity that produced a taxable annual income of $11,014 of which she is now using to fully pay up her ROP LTC Plan without an inflation rider.
Allison decided to pay taxes due on the annuity distribution out of pocket to preserve more funds for her ROP LTC plan. Her premium is guaranteed to remain the same and the policy will be fully paid up in 10 years. Her 10 year IRA conversion will generate an immediate and perpetual leveraged LTC benefit totaling $475,188 ($4.75 to $1) – $6,600 per month, for 72 months. In addition, should Allison pass away without needing her LTC benefits, there is a life insurance benefit of $158,396 that will be paid tax-free to her beneficiaries ($1.58 to $1).
Had Allison decided to choose the 5% Simple Inflation Rider her immediate LTC pool would have been $293,666. In 20 years, at age 80 it would have increase to $541,650 or 7,070 a month for 72 months. Fully guaranteed!
Now that’s what I call leverage!
To receive your own personalized example of how the IRA Leveraged LTC Strategy could work for you call 1-888-892-1102 or complete the ROP LTC Request Form by clicking the button below.