CLASS Act

[Arthur Rudnick]

Sure Bill,
What do you want to know about annuities? I'll post my thoughts and then Scott can tell me where I'm wrong.

 

[yankee466]

geeeeez......now I need to find another good LTC board not monopolized by Scott and Arthur sniping at one another all the time.

 

[yankee466]

If you want to offer products that promise a lot and rarely deliver much...then equity indexed annuities are the way to go. Especially if you like good commissions. Nothing like spreads, caps, participation rates, and annual resets on all the rules to make it clear as mud for the inexperienced.

Just an opinion of course. A fixed annuity may out actually perform. Likely you need to switch over to the annuity forum for copious discussions on the subject.

There is certainly a market for annuities out there.

 

[Arthur Rudnick]

Bill,
I'm far from being an expert on annuities. I do a few each year, either fixed rate deferred or single premium immediate annuities (SPIA) which are usually tied into a LTC policy sale in order to generate a stream of income each year to pay the premium.
While annuity rates are slowly creeping up, you're lucky to get a fixed rate deferred annuity today that pays 2% or more. I may be wrong, but I'd guess the annuity market has slowed down as interest rates are at rock bottom. However, 2% is better than 1% (or less) in a MM or CD.
I notice there's an annuity forum here that you might want to try.

 

[Mr_Ed]

My point exactly. Annuities. I have had several clients asking me about annuities latey. Indexed annuties. Where can I go to get good advice on what is appropriate for different situations. Is there someone somewhere to help me with this as a FMO maybe? They all seem to talk the talk, but then have young inexperienced folks on the phone guessing what is approprate. I hate to miss the new business, but I want to do it right if I do annuties. Any advice Art, Scott, or yankee? Or anyone else of course.

Bill,

Other than GenW, do you know any insurers who will do a 1035 exchange from a deferred annuity (or SPIA) directly to the insurer that your client has the LTCi policy, and NOT send a 1099 on the gains to the annuitant/owner?


GenW is the only one that I've found that will do that.

sao

 

[RichS]

Sounds to me like a just joined a very lively forum. Debate is always a good thing. I hope you guys continue to talk. We can't resolve these kinds of issues without give and take and we do, as a country, need to resolve this health care major problem.

RichS

 

[RichS]

I never met an insurance person who was ever shy. However I have met a lot of LTCI agents who didn't know what they were talking about. Not saying that that is the case here with this lively debate. Most agents I have known haven't taken the time to learn enough about LTCI to understand how it works.
As far as the forum goes I just got involved so I don't know whether it's boring like most or lively like this discussion has been. I hope it's the later.

RichS

 

[Mr_Ed]

I never met an insurance person who was ever shy. However I have met a lot of LTCI agents who didn't know what they were talking about. Not saying that that is the case here with this lively debate. Most agents I have known haven't taken the time to learn enough about LTCI to understand how it works.
As far as the forum goes I just got involved so I don't know whether it's boring like most or lively like this discussion has been. I hope it's the later.

RichS

I don't think any of us who participate in the LTCi part of this forum are a CFP, like you are. Please feel free to let us know when we're wrong about something.

 

[Arthur Rudnick]

Rich,
I have a feeling you'll find it on the lively side..........

I think you'll find that most LTCi specialists have a pretty good handle on the business.
It's those that dabble in the product that very often don't have a clue.
- - - - - - - - - - - - - - - - - -
In all due respect to our Secretary of Health........
This woman is an ***!

U.S. Health and Human Services Secretary Kathleen Sebelius says regulators are coming up with ideas for keeping the new federal worksite long term care (LTC) program stable. Sebelius, a former Kansas insurance commissioner and former president of the National Association of Insurance Commissioners, Kansas City, Mo., talked about the Community Living Assistance Services and Supports (CLASS) component of the Patient Protection and Affordable Care Act (PPACA) today at a briefing organized by the Washington office of the Henry J. Kaiser Family Foundation.
The CLASS Act program can help provide security and dignity for Americans with severe health problems and disabilities, Sebelius said, according to a written version of her remarks provided by the U.S. Department of Health and Human Services (HHS).
"That said, President Obama and I have also recognized that the CLASS statute wasn't perfect," Sebelius said. "Many of the changes proposed to the Senate health reform bill that would have improved the CLASS program's financial stability were not included in the final legislation."
But Sebelius said she believes the PPACA provisions that created the CLASS program give HHS officials the flexibility and authority to put the program on firm footing for years to come.
THE CLASS ACT
The CLASS Act is supposed to create a voluntary worksite LTC benefits program. Insurance groups and actuaries at the Centers for Medicare & Medicaid Services have criticized the program and argued that it will be actuarially unsound.
Budget analysts say the CLASS Act would reduce the cost of implementing the Affordable Care Act up until 2014 but then would add $76 billion to the deficit from 2015 to 2020.
The leaders of a presidential deficit commission argued in December 2010 that the CLASS Act program must be reformed or repealed..
SEBELUS'S IDEAS
Sebelius acknowledged that the deficit commission had criticized the program but said some of the challenges could be addressed to by taking steps to avoid antiselection.
CLASS program managers cannot engage in the kind of underwriting found in private insurance, but program managers can spread risk as broadly as possible by making sure the program is attractive to workers and easy for employers to administer, Sebelius said.
Program managers can make the program more appealing to employers by calculating workers' premiums, so employers don't have to, Sebelius said.
"Another option would be to change the employment and earnings requirements for the program," Sebelius said. "The CLASS program was designed to protect the workers of today against future needs. That's why it included a requirement that people earn a certain amount of money in order to participate. But if that standard is set too low, we may have too many enrollees who will quickly claim benefits thereby threatening CLASS's financial viability. That's not the intent of this program, so we will look closely to make sure we've picked the right cut-off."
HHS officials also are looking for ways to keep workers from skipping premium payments and then re-enrolling in the program without paying any penalty, Sebelius said.
Sebelius also talked about program premiums.Instead of setting the initial premiums very high, making it difficult to attract a broad base of enrollees, or setting initial premiums too low to support the promised benefits, program designers are "looking at options for indexing premiums so they would rise along with benefits," Sebelius said.
"And because we know that many Americans have had their confidence shaken by large premium hikes over the last few years, especially in the long-term care insurance market, this indexing system would have to be completely transparent," Sebelius said. "That way, people could plan ahead without being surprised by sudden large rate increases."

 

[RichS]

Arthur,

Yes, I can already see people like to express themselves... that's good. I agree that LTCi specialists certainly know what there talking about when it comes to LTCI. It is the occasional LTCi insurance agent who doesn't seem to understand the complexity of the product.
Thanks also to never_a_dull_moment for their comment.
Glade I signed on to this forum. I'll probably learn a lot.
RichS CFP(r)