Converting Life Insurance Policies Into Senior Care Benefits

The total estimated cost to employers for all full-time, employed caregivers is $33.6 billion, according to a caregiving cost study conducted by MetLife. The reasons for these cost are due to the toll caregiving takes on employees resulting in:

  • Arriving late or leaving early
  • Missing work
  • Using sick days and vacation days to provide care
  • Lower productivity due to job interruptions
  • Higher rates of chronic diseases such as depression, heart disease or kidney disease
  • Reducing their time at work from full-time to part-time
  • Giving up work entirely

The reason your employees are finding themselves in the position of becoming caregivers is because most people their parent’s generation have not been educated about long term care and not given an opportunity to plan for it. Statistics show that the majority of seniors do not understand the various forms of long term care, the different means to pay for it, and most do not plan for long term care until they are hit by a health care crisis.

Too many people find themselves in the midst of a crisis situation when they have to start trying to figure out how the world of long term care works.  Long term care is a very expensive proposition.  Families can go broke trying to provide for a loved one. This is why in many cases parents turn to their families for support and why your employees are finding it so difficult to be as productive as they once were.

To reduce caregiver stress and improve employee productivity, many employers are seeking ways to alleviate the burden placed upon employees by offering long term care insurance. This is a valuable benefit for those who have time to plan. But for the parent who needs care now, something else needs to be available.  By converting life insurance policies into a Long Term Care Benefit Plan, seniors are able to avoid or delay Medicaid.

Instead of allowing a life insurance policy to lapse or be surrendered because they can no longer afford the premiums or to qualify for Medicaid, the owner can exercise their legal right to convert their policy into a Long Term Care Benefit Plan. This involves the conversion of an in-force life insurance policy into an irrevocable, FDIC-insured Converting a policy allows the senior to remain private pay — meaning they are not reliant on public assistance and can choose the form of long-term care that they want: homecare, assisted living and skilled nursing, hospice or memory care.

Because the policy is sold for its full market value—instead of abandoning it for nothing—and the funds are protected in an irrevocable FDIC insured benefit account that is only used to pay for long term care services, it is a Medicaid qualified spend-down, a VA qualified spend-down and benefit. And, because the funds are only used for long term care supports and services, it is a tax-free monthly benefit

The Long Term Care Benefit Plan is an accepted form of payment with any provider of Senior Care in the United States. This funding option has been covered in the The New York Times, The Wall Street Journal, USA Today, Fox Business News and on radio programs across the country.  Because it is a consumer protection and saves tax payers’ money, it has been endorsed by numerous consumer and advocacy groups as well as political leaders across the country.

The option to convert a policy to pay for long term care is available in all states, and now consumer notification laws have been introduced in 13 states (to date) to make sure people are informed that converting a life insurance policy into a Long Term Care Benefit Plan is an accepted part of a Medicaid and VA spend-down.

To quality as a Medicaid qualified spend-down, this Conversion law calls for a specific Long Term Care Benefit Plan structure to protect the funds and ensure they will only be used for long term care services.

By Patti Goldfarb, Employee Benefits Advisors Group and Chris Orestis, Life Care Funding

Patti Goldfarb is an employee benefits specialist and the owner of the Employee Benefits Advisors Group. She has written and spoken extensively about healthcare reform since its passage in 2010.  If you would like more information about this program, Patti can be reached at (201) 255-6239 or

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