Annuity Care II can help you convert your taxable assets to tax-free when used for qualifying LTC. As part of the OneAmerica Retirement Care Solutions product suite, it uses a single premium deferred annuity to help protect your retirement income stream if the need for care arises.
It also features a built-in continuation of benefits provision, funded through a monthly charge deducted from your base annuity to extend the length of your protection for a period of time that you choose. Your one-time premium can provide a tax-efficient way to help pay for LTC. And the company may credit a higher interest rate to amounts withdrawn for qualifying LTC expenses.
By choosing to pay with a single premium, you are guaranteed that no more payments will ever be required.
Also, there are no unexpected premium increases sometimes seen with traditional long-term care insurance.
How does Annuity Care II work?
Reallocating existing annuities into Annuity Care II can help maximize those assets if they’re needed to pay for qualifying LTC expenses. And, any funds you don’t use for LTC will pass on to your heirs. Annuity-based products from OneAmerica Care Solutions feature two accounts:
- the accumulated cash value (AV)
- the long-term care accumulated cash value (LTCAV).
Your money is credited interest each month in both accounts, with a higher rate applied to your LTCAV, allowing higher growth to provide more assets to help pay qualifying LTC costs.
Withdrawals are allowed from the LTCAV to help cover qualifying LTC expenses, subject to the monthly LTC maximum amount and a 90-day elimination period.
- Provides 24 months of base LTC benefits for a single person, and 30 months for a joint contract
- Once the base is exhausted, the continuation provision kicks in for the length of time you choose at the time of application:
- Three years (ages 40 to 80)
- Six years (ages 40 to 75)
- Nine years (ages 40 to 70)
- Features a minimum guaranteed interest rate credited to both accounts
- Allows fund withdrawals after a 90-day elimination period to help pay for qualified LTC
- Access up to 10 percent of the accumulated cash value (AV) with no surrender charges for non-LTC withdrawals.
Thanks to the Pension Protection Act (PPA) of 2006, annuity-based products funded with after-tax money (non-qualified funds) receive distinct tax advantages. Qualifying LTC expenses are distributed tax-free, whether from your base contract or the extended protection option.
You can exchange an existing non-qualified annuity for one eligible for the PPA advantages via either full or partial 1035 exchange.
Your steps to get the care to meet your needs
Underwriting for Annuity Care II is slightly more flexible when compared to traditional LTC insurance. It consists of several health questions on the application and a brief telephone interview. No medical exams are necessary.
Benefit payments are triggered in one of two ways:
1.) You cannot perform at least two of six Activities of Daily Living (ADLs), which include
- maintaining continence
- dressing yourself
- eating/feeding yourself
- toileting (including getting on and off a toilet)
- transferring (like from a bed to a chair)
2.) You require care due to severe cognitive impairment (such as Alzheimer’s disease).
Actual LTC expenses will be paid from the LTCAV up to the stated monthly LTC benefit limit maximum. The client will receive the lesser monthly LTC limit or the actual charge for care.
Bed reservations can “hold your spot” in a facility if you require more specialized care in a hospital for a period of time. Respite care allows a primary caregiver to take a short break to travel or have a few days off from providing care.
Cover your spouse
If you own an individual annuity, adding your spouse as an owner can involve a lot of paperwork. But there’s a way to ensure your spouse can also enjoy the protection of your new LTC annuity.
Transfer your existing non-qualified annuity with a single annuitant/owner via 1035 exchange into Annuity Care II and designate your spouse as an Eligible Person. This makes your spouse eligible to receive payments for qualifying LTC expenses.
This is a simple way of securing access to LTC protection for your spouse, who might not be listed as an owner or annuitant on your current annuity.
Annuity Care II provides more than LTC protection
- Add your spouse to an individually owned annuity
- Access up to 10% of your funds with no surrender charges for non-LTC withdrawals
- Claims Concierge to support you through the claims process
Looking to the future
Americans are living longer than ever, with an average life expectancy nearing 80 years in 2015. Annuity Care II provides options to help maximize your protection for as long as you need it.
This option can help protect against the rising costs of long-term care expenses due to inflation.
Inflation protection guarantees both the continuation of benefit balance and the maximum monthly benefit limit will increase 5 percent each year, compounded annually.
As costs increase, so does your monthly benefit amount.
The inflation protection option applies only to the Continuation of Benefits and does not increase the amount available for qualified LTC during the initial period of care (24 months for a single insured, 30 months for two insureds).
It must be chosen at the time of application and may only be funded in addition to your single premium.
Availability may vary by state.
Washington Long-Term Care Tax
OneAmerica meets the requirement to opt out of the Washington Long-Term Care Tax. Apply Now.