Mutual of Omaha Announcement Regarding LTCi in WA

[term2u]

Jack...it's my understanding that we can sell 7702b term policies (like Hancock) that will allow these people to avoid the tax.

I have several WA clients where the premium for the term insurance will be less than the tax.

Do you believe this to be true?

I would LOVE to know about this as well... I primarily focus on the life and DI market with some LTC thrown in there as well, but I've been hit with an onslaught of my WA clients who are working for a lot of the tech companies in WA and are going to get hammered with this tax and are looking for alternatives.

They're fine with paying for the policies long-term but they're looking for the most cost-effective way of satisfying the requirement so if anyone has any ideas with regard to other carriers, it would be greatly appreciated!!

 

[ltcadviser]

I would LOVE to know about this as well... I primarily focus on the life and DI market with some LTC thrown in there as well, but I've been hit with an onslaught of my WA clients who are working for a lot of the tech companies in WA and are going to get hammered with this tax and are looking for alternatives.

They're fine with paying for the policies long-term but they're looking for the most cost-effective way of satisfying the requirement so if anyone has any ideas with regard to other carriers, it would be greatly appreciated!!

National Guardian Life traditional LTC policy, $100 day, 2 year benefit period, 3% compound inflation.

Nationwide Guaranteed no lapse IUL or UL, $100,000 death benefit, 3% accelerated death benefit LTC Rider.

 

[Northeast Agent]

SUSPENDED IMMEDIATELY: Thrivent long-term care sales in WA through independent agents/third party advisors.

As a leading long-term care insurance carrier, Thrivent has a responsibility to their contract holders and distribution partners to ensure that product offerings are being used in a manner consistent with their original intent to protect clients against the risk of long-term care expenses.

Effective 3 PM PDT / 5 PM CDT on 6/17/21, Thrivent suspended long-term care sales in the state of Washington through independent agents/third party advisors.

The details:

This cessation of long-term care sales is limited to the state of Washington and to independent agents/ 3rd party advisors.

• Applications submitted on or before this cutoff date/time, will be processed as normal.
• All pending in-house business will be processed as normal.
• Any applications received after this cutoff date/time will not be accepted. No exceptions will be made.
• eApp will error out if/when an advisor attempts to submit a long-term care application for a WA state resident.

Thrivent anticipates resuming long-term care sales through independent agents/third party advisors later this year.

 

[scagnt83]

National Guardian Life traditional LTC policy, $100 day, 2 year benefit period, 3% compound inflation.

Nationwide Guaranteed no lapse IUL or UL, $100,000 death benefit, 3% accelerated death benefit LTC Rider.

Some CPAs are recommending clients get a policy closer to the actual cost of care in the state. They claim there has been talk of increasing benefits (above and beyond COLA) in future years.

 

[Tahoe Ray]

Some CPAs are recommending clients get a policy closer to the actual cost of care in the state. They claim there has been talk of increasing benefits (above and beyond COLA) in future years.

That's the way to approach it if you want to do actual insurance planning.

Do some fact-finding and discuss LTC as a need etc.

If not, the alternative is to take it as low-hanging fruit and a tax play (cheaper insurance than the tax).

 

[term2u]

National Guardian Life traditional LTC policy, $100 day, 2 year benefit period, 3% compound inflation.

Nationwide Guaranteed no lapse IUL or UL, $100,000 death benefit, 3% accelerated death benefit LTC Rider.

Thanks, Jack - You're the man!

I've had a lot of high-income $300-500k+/yr doctors and techies who are in the 30-45 range contact me about mitigating this tax, so do you know if any Traditional LTC carriers that will offer coverage to people under 40? If this isn't the case, then it sounds like the Hybrid's like Nationwide, Minnesota Life, etc. will be the only options unless anyone else has any ideas?

Thanks again!

 

[scagnt83]

That's the way to approach it if you want to do actual insurance planning.

Do some fact-finding and discuss LTC as a need etc.

If not, the alternative is to take it as low-hanging fruit and a tax play (cheaper insurance than the tax).

Im talking purely from a tax-planning standpoint, not insurance protection. This is coming from CPAs who have large client bases in WA.

1. Legislators have talked of adding a requirement of "renewals" of the tax exemption. Meaning people must prove in future years they still have coverage that is "substantially similar" to the state provided coverage.

2. They have also talked about increasing state benefits in the future to an amount closer to the actual cost of care. Meaning that COLA increases would not keep up.

So if the renewal issue is approved, and benefits are increases as talked about. A $100/d plan would not qualify for the exemption in future years.

Its about making sure they qualify in future years. Not just this year.

 

[ltcadviser]

Thanks, Jack - You're the man!

I've had a lot of high-income $300-500k+/yr doctors and techies who are in the 30-45 range contact me about mitigating this tax, so do you know if any Traditional LTC carriers that will offer coverage to people under 40? If this isn't the case, then it sounds like the Hybrid's like Nationwide, Minnesota Life, etc. will be the only options unless anyone else has any ideas?

Thanks again!

Omaha and Thrivent just shut WA down. NGL needs over age 40. Would not be surprised if they shut it down soon too. Everyone calling me is seeking $3000 month, 2 years of benefits. Companies can’t spend resources to issue and underwrite policies with bare minimum benefits, just to have the policyholders lapse these policies once they get their tax exemption. I have spoken to a dozen Microsoft engineers in the past week making $360,000 in salary and they are calling around to find the smallest policy available for a $500/year premium solely to get out of the state tax.

 

[Tahoe Ray]

Im talking purely from a tax-planning standpoint, not insurance protection. This is coming from CPAs who have large client bases in WA.

1. Legislators have talked of adding a requirement of "renewals" of the tax exemption. Meaning people must prove in future years they still have coverage that is "substantially similar" to the state provided coverage.

2. They have also talked about increasing state benefits in the future to an amount closer to the actual cost of care. Meaning that COLA increases would not keep up.

So if the renewal issue is approved, and benefits are increases as talked about. A $100/d plan would not qualify for the exemption in future years.

Its about making sure they qualify in future years. Not just this year.

I get it as I'm dealing with it.

No one wants what you're discussing. They all want the cheapest option. As I mentioned, we should all be doing the right planning by informing clients about options, pitfalls, changes, etc. but a lot of these folks are short-sighted.

Hopefully, they'll qualify for more coverage in a few years when what you said comes to fruition.

 

[ltcadviser]

2. They have also talked about increasing state benefits in the future to an amount closer to the actual cost of care. Meaning that COLA increases would not keep up..

The actual cost of care today in Seattle is $10,000 month. WA will need a 2% payroll tax for that. Everyone is upset over a 0.58% payroll tax. Good luck with that.