Monday, October 19, 2009

Increased Tax Deduction Limits For Long-Term Care Insurance

The Internal Revenue Service (IRS) has announced increased deductibility levels for long-term care insurance policies purchased in 2010. "For the first time, the maximum deductible limit for an individual exceeds $4,000," explains Jesse Slome, Executive Director of the American Association for Long-Term Care Insurance , the national trade organization.

"The federal government and an increasing number of states are sending a clear signal that individuals need to plan for long-term care and tax deductibility and tax credits certainly make long-term care insurance more attractive to millions," Slome adds. "It is a positive sign to see limits for long-term care insurance deductibility increase especially when pension contribution limits for 2010 were not increased."

The end of the year provides a double tax-saving incentive for consumers. There is still time to take advantage of tax deductions in 2009 and also benefit from the increased deductible limits next year.

The 2010 deductible limits under Section 213(d)(10) for eligible long-term care premiums includable in the term ‘medical care’ are as follows:
Age 40 or less: $ 330
More than 40 but not more than 50: $ 620
More than 50 but not more than 60: $1,230
More than 60 but not more than 70: $3,290
More than 70: $4,110

A complete explanation of tax deductible rules for individuals and business owners can be found on the Association's website: Click here for 2010 tax deductible limits.

Friday, October 9, 2009

Long Term Care Insurance Coverage Question Regarding Penn Treaty Liquidation

I am still learning much about the Internet. I recently created a LinkedIn group for long-term care insurance producers and others. There have already been some interesting discussions between the members and I'd encourage you to consider joining.

I'm not 100% sure how to join groups ... but I know you can do so by first getting linked to me (which I'm happy to do). Go to:
If there's a better way ... let me know.

Once on my LinkedIn page, you want to click on the the group Long-Term Care Insurance Producers. (Look on the lefthand side at the top). You do NOT want the one USA - AALTCI (someone smartly created that group ... not me ... and thus I can not monitor or make sure it serves what I believe is the intent).

Anyway ... there are currently about 101 participants ... and some good stuff.
Jesse Slome
American Association for Long-Term Care Insurance

Below is one of the questions and responses that I believe will be of interest.

Question from Kathleen Smith

After the latest news on Penn Treaty, I revisited the AALTCI 2009 Sourcebook article on State Guaranty Associations. I know that LTCi is protected up to $100,000. But, what does that mean to policy holders not on claim? If they have a 5 year/$250,000 policy benefit does their premium remain the same with it being paid to the State? If so, is their premium adjusted to reflect a $100,000 policy benefit rather than a $250,000 benefit pool compounding annually? ...

The response which I obtained from Sean McKenna at the National Association which comprises all the State Guaranty Associations.

The new NAIC Guaranty Association Model Act recommends $300,000 for LTC coverage. A number of states either have passed the new model limit or have it under consideration now. In answer to your second question, no, the premiums do not decline.
Sean McKenna
Director of Communications

Thursday, October 8, 2009

Penn Treaty May Need More Than $1 Billion for Claims

Many long-term care insurance agents have clients who they placed with Penn Treaty and others have asked to be kept aprised. I thought the following would be of interest and value.
Jesse Slome
American Association for Long-Term Care Insurance

Summarized from a Bloomberg Report: Penn Treaty Network American Insurance Co., facing the biggest insurer failure in at least five years, may need more than $1 billion in additional funds to pay claims, a state regulator said.

Penn Treaty “is far more insolvent than originally believed,” Pennsylvania Insurance Commissioner Joel Ario’s office said in an Oct. 2 request for liquidation. Penn Treaty American Corp., the Allentown, Pennsylvania-based parent of the insurer, included the document in a regulatory filing yesterday.

Sellers of long-term care coverage, including Penn Treaty, suffered after underestimating expenses, while the broader life insurance industry has reported losses on declines in stocks and bonds. Penn Treaty, with about 120,000 customers, was hurt by investment losses in the recession and “seriously under- reserved” for claims in previous years, the regulator said.

“It’s potentially a big deficit mostly that will come from guarantee funds,”a spokeswoman for Ario’s office, said in an interview. Policyholders pay Penn Treaty about $249 million in annual premium for coverage, and the regulator ruled out using rate increases to bridge the potential $1.3 billion gap between assets and future claims. That deficit will be left to state guaranty funds, which are funded by solvent insurers.

Penn Treaty is among at least eight carriers in the U.S. facing forced rehabilitation or liquidation by regulators this year, according to data collected by the National Organization of Life & Health Insurance Guaranty Associations. That compares with four in 2008.

Ario, who seized Penn Treaty in January, didn’t find an insurer to purchase or assume any of its policies. According to Nolhga, Penn Treaty has about $1 billion in assets. Cash from premiums will be sufficient to pay claims for several years, Placey of the Pennsylvania regulator said.

“There’s enough money to pay claims going forward and get the guaranty associations ready for the transition,” Placey said. Guaranty funds are used to pay claims when regulated insurers are unable to meet obligations. Penn Treaty policies will remain active for customers who continue to pay premiums. A state court will weigh Ario’s request to liquidate the company, his office said in statement last week.

Friday, October 2, 2009

Pennsylvania Insurance Department Petitions to Place Penn Treaty Into Liquidation

October 2, 2009. The Pennsylvania Insurance Department today filed petitions that seek orders of liquidation for Penn Treaty Network America Insurance Company and its subsidiary, American Network Insurance Company. The petitions are subject to the approval of Commonwealth Court.

"We have been on-site analyzing the organizations' assets, liabilities, reserves and surpluses since we began our rehabilitation action in January," Insurance Commissioner Joel Ario said. "Our comprehensive, independent evaluation has determined that the companies do not have the ability to pay future claims without significant rate increases that would have to be requested and approved in all 50 states. In the current circumstances, those rate increases simply would not be fair to policyholders.

"We have instead petitioned for an orderly liquidation of all company assets in which policyholders' claim payments are our number one priority. Additionally, active long-term care policies will not be canceled, except by the policyholder, so they will be transitioned to the states' guaranty funds once an order takes effect. Guaranty funds have the right to assess other insurance companies to cover policyholder claims up to coverage limits that vary by state."
Penn Treaty Network America, headquartered in Allentown, and its subsidiary, American Network, provide long-term care insurance to more than 120,000 policyholders.

Together, the companies offered long-term care insurance in all 50 states and the District of Columbia. Policyholders and other interested parties will receive further information about the liquidation when the court enters an order. In the interim, policyholders with questions on claims or non-claim matters may call, toll-free, 1-800-362-0700, ext. 3270.

Posted by Jesse Slome
American Association for Long-Term Care Insurance