Archive for February, 2017

Special Training

February 22, 2017

First a few definitions.  Insurance Agent: Someone who represents only one insurance company & who,  for the most part, can only offer that company’s policies.  “An insurance agent is a person or an organization appointed by an insurer to solicit applications for insurance on its behalf.”¹  An agent’s principal is his/her insurance company.  An agent always has a duty to his/her principal.

Insurance Broker: Someone who offers insurance policies from multiple insurance companies.  “An insurance broker is usually the agent of the applicant for purposes of procuring the insurance or of making the application…”.¹ 

Insurance Producer:  In Colorado (& a number of other states), agents & brokers are collectively licensed as Insurance Producers.  Consumers would be wise to ask the insurance person they are working with if he/she is acting as an agent or a broker.  


Before 2009.  Colorado insurance producers wanting to offer long term care insurance were required to first complete a one-time, two-hour class (pre-approved by the Colorado Division of Insurance).  I know because I created, then taught an approved course from 2001-2008.

Colorado Long Term Care Partnership. Program became operational in Colorado on 1/1/2008.  Both Partnership & non-Partnership long term care policies could (and can still) be offered.  The majority of states now have Partnership plans.  In a nutshell, state Partnership plans offer: For Medicaid asset eligibility purposes, each dollar of Partnership-qualified long term care insurance policy benefits actually received by a policy owner, increases, by one dollar, the amount of assets someone could keep & still qualify for Medicaid.  Example: To qualify for Medicaid long term care, a single person can have no more than $2,000 in non-exempt assets.  If that person has a Partnership-qualified long term care policy that has paid out $500,000 in benefits, he/she could qualify for Medicaid long term care while retaining $502,000 in assets.  More about Long term Care Partnership at a later date.

Starting in 2009.  On 1/1/2009, for already licensed (Accident & Health) Colorado insurance producers, the requirement changed to a one-time completion of two eight-hour courses (16 hours in total) plus a refresher five-hour refresher course every two years.  Please understand that this is the bare minimum for a producer to become long term care insurance “street legal”.  Years of experience & genuine caring, plus even more additional training (for example, earning the CLTC designation) is needed to become truly competent.  It is a given that anyone who sells long term care insurance should own it themselves.

More Questions.  What happens if you buy a long term care insurance policy in Colorado & then move to another state…Is your policy still in effect?  Can your original Colorado insurance producer continue to provide service?  The answers to the questions are “yes” and “yes”….your policy remains in effect (unless it has otherwise lapsed) & your Colorado insurance producer can still provide service even if not licensed in your new state.

A more complicated question:  “Can a Colorado-licensed producer offer a long term care insurance policy to a resident of another state?”  The answer: “it depends”.  First the producer must be non-resident insurance licensed in the state where the “buyer” is a resident.  Forty-two states have mandatory long term care Partnership training requirements, including six that do not have Partnership programs (huh?).  Here is where it gets even more murky.  Some non-resident states honor Partnership training completed in the resident state.  Others do not.  Some honor a portion, but not all, of completed resident state training.  One case is Massachusetts which requires an otherwise trained insurance producer to complete an additional two-hour course on that state’s unique Mass Health program.  And there are other examples.

So with all this mish-mash of requirements, how is a consumer to know if their agent/broker is properly licensed in their state?  While confusing for producers, it is simple for the public.  Every insurance company is required to confirm that the producer submitting an application on behalf of a consumer is properly  licensed & trained for that particular state….or else the insurance company cannot process the application.  In the face of potential large fines, insurance companies do in fact comply.

What does all this mean to you?  As a consumer, you want to buy long term care insurance from someone who, at the very least, is properly licensed & whose training is current.  For this, you may safely rely upon the insurance company you are applying with.  Of at least equal importance is your insurance person’s integrity.  For the latter, you will have to rely upon your gut instincts.

Footnote¹: Quoted from Law And The Life Insurance Contract, by Michael Crawford & William Beadles, page 85


© 2017, Raymond Smith, The Long Term Care Specialist

Disclaimer: Raymond Smith, The Long Term Care Specialist, is an insurance professional specializing in helping people plan for long term care.  He is not an attorney.  Please consult with a qualified attorney if you have questions about the law of agency or long term care insurance producer’s legal training requirements.


Medicare Provides Really Good 20 Day Nursing Home Coverage

February 22, 2017

Everyone on Medicare has this “insurance”.  However, there are five that must first be met.

  1. You must have spent at least three consecutive overnights in a hospital, within 30 days of entering a Medicare-approved nursing home (“Skilled Nursing Facility” in Medicare speak).
  2. The minimum three hospital nights must have been while in an admitted, not observation status.  This can be tricky.  Do not assume your status is “admitted” just because you are in a hospital bed & receiving treatment.
  3. You must need & receive skilled care (not custodial care) in the nursing home.
  4. You must need skilled care in the nursing home for a condition that was treated during your qualifying three-night hospital stay.
  5. Of course, you must have been covered by Medicare, Part A (hospital insurance).

The need for spending three continuous hospital overnights, while in admitted status, cannot be overstated.  Far too many people have found out, too late, that they are on the hook for all nursing home costs because they did not meet all four of the above “musts”.   None of the four requirements can be waived.

So what nursing home costs does Medicare actually pay for if you have done everything you were supposed to do?

a. For the first 20 days in the nursing home, Medicare pays all cost.  You pay nothing.

b. For nursing home days 21-100, you pay $154.50 per day ($4,935 per month) in 2017.  Medicare pays any remaining costs.  Average cost for a Metro-Denver nursing home, semi-private room, is $282 per day.  So this is not a bad deal…if you must be in a nursing home anyway.

c. Beyond day 100, you pay everything.  Medicare pays nothing.

Can you now see where the erroneous belief that “Medicare pays for the first 100 days in a nursing home” came from?  Most long term care insurance policies have a 90 day elimination period…not because Medicare pays everything for those days (which it does not).  Rather to hold down the cost of long term care insurance by eliminating multiple, very short, claims.

Please forgive my facetious headline for this article.  It was intended to get your attention…which it did if you have read this far.  Now be sure to read the below disclaimer.


© 2017, Raymond Smith, The Long Term Care Specialist

Ray Smith, The Long Term Care Specialist, is not an attorney or otherwise an expert in Medicare rules.  Medicare is a complicated program.  Please consult with a competent elder law attorney (who knows Medicare).