The Immediate Care Plan
(Designed for individual's, their family's, and Powers of Attorney)
One of our areas of service is to help families with Seniors who are receiving care, or those who are about too. We make sure they are informed of all the ways to pay for that care, and also don't run out of money on that journey.
By making sure an individual's income and assets are positioned correctly, we try to offer the one thing no one else gives them. That is, peace of mind and certainty that they can continue to receive the care they deserve for as long as it's needed. We accomplish this by creating a stop loss for the cost of their care.
Of course, a senior care facility would also benefit by reducing turnover and the cost to replace a resident who can no longer afford their services. Our plan is also effective if someone desires to receive care while remaining in their own home.
How Does It Work?
If you or a loved one needs to pay for long-term care, then an immediate needs annuity could be an option worth looking into.
You might have heard of a pension annuity, which is essentially a contract with an insurance company. In return for handing over a portion of your personal savings, including an IRA, you’ll be paid a guaranteed income for life, or over a fixed term.
An immediate needs annuity works in a similar way, except they are specifically designed to pay for long-term care. In a discussion with yourself, your children, or a Power of Attorney, we explain all of the ins and outs of immediate needs annuities – also known as immediate care plans – so you can decide whether they might be the right choice for you.
* For additional information on how an Immediate Needs Annuity works, please see below.
How does an immediate needs annuity work?
Immediate needs annuities provide funds for people who will likely be in care for the rest of their lives, either at their own home or in a care home. The income from the annuity is used to cover the cost of senior care facility fees, or employing a care person at home, both of which can be very expensive.
Many people who go into care are uncertain how long they will be there, so it can be difficult to budget for, and could end up being very costly if it turns out to be longer than expected.
An immediate needs annuity can ensure that the facility will receive a consistent monthly income to cover care bills. Most plans will be designed to increase with inflation or by a regular amount in order to keep up with rising care costs. This can provide greater peace of mind than paying from your own funds or savings, because as long as you are alive, your provider will always make your annuity payments – it won’t run out.
If you live long enough then you may well end up benefiting more from this purchase, as you may end up receiving more in care payments than the lump sum you handed over.
An immediate needs annuity can also be convenient because you do not have to handle making payments yourself. Income from an immediate needs annuity is paid directly from the annuity provider to the care provider, so you won’t have to worry about making the payments each month.
What happens to my immediate needs annuity if I change care providers?
Plans tend to be quite flexible in terms of who receives the payment, so if you decide to change care providers, the insurer providing your immediate needs annuity can simply arrange to send payments to the new care home or carer.
Do I need an immediate needs annuity?
You might want to consider an immediate needs annuity if you or your loved one is in care, or expects to be very soon, and you or they want the confidence that the costs of caring are all squared away. This doesn’t just mean care in a nursing home – if you have a carer who comes around to your house then an immediate needs annuity can cover this expense too, even if they only come a few times per month.
How much is an immediate needs annuity?
The cost of an immediate needs annuity will depend on your circumstances. The company will look at how much you need and how long they expect you to need it for. Ultimately, your upfront payment will depend on:
The state of your health and your life expectancy
Current annuity rates
The income you’ll need, and whether this will stay the same or increase over time
In some cases you can pay extra to ensure that your family would receive your lump sum back if you were to die much earlier than anticipated. This is called a capital protection clause.
How much will I be taxed on my immediate needs annuity?
Another major advantage of immediate needs annuities is that payments are not considered part of your income, as they are paid directly to the care provider. Therefore, unlike with other types of annuity, income from an immediate needs annuity is tax-free.
What are the downsides of an immediate needs annuity?
As with any kind of annuity, an immediate needs annuity is a big commitment. After a brief cooldown period (usually 30 days) during which you can opt to back out, you’ll be locked into your plan.
This means that you can’t cancel if you change your mind and want your lump sum back.
An immediate needs annuity can also be a bit of a gamble if you don’t know how long you’ll need care. It can be very good value if you end up staying for a long time – however, if you die after only a few years, or you unexpectedly stop needing care, you may make back far less in care payments than you spent on the plan in the first place, and end up losing a big part of your estate for nothing. This is a major reason to consider paying extra for a capital protection clause, which will refund your lump sum to your family if you die very early on after buying the plan.
Finally, you should be aware that being on an immediate needs annuity might make you ineligible for certain means-tested state benefits, depending on how high the payments are.
How do I find a good immediate needs annuity plan?
This concept was developed in the United Kingdom, and was brought to the United States by an organization I represent, Federal Life Insurance company. At this point in time, this plan is proprietary to us and we are the only ones offering it in the U.S. However, as with any important financial decision you should learn as much as you can and then seek professional advice on your specific circumstances. We can provide this education and advice and then give you a quote should you have developed an adequate comfort level.
* Please contact us to learn more, or to receive a personal quote.