One America Annuity Care Overview
For Long Term Care Annuities we recommend Global Atlantic ForeCare.
For Asset Based Long Term Care Policy’s Securian SecureCare and Nationwide CareMatters II.
By: Cliff Marshall
One America Annuity Care is a single premium deferred fixed interest annuity that combines long-term asset growth and long-term care (LTC) benefits. You can use asset such as a CD or Cash to fund it, Or you can use qualified funds like a 401k/IRA Roll Over.
How Does One America Annuity Care Work?
Lets take a $100,000-60 Year Old Male- Single $100,000 IRA fund transfer.
One America Annuity Care
The Long Term Care value column is the available funds for tax free withdraws to be used for long term care needs.
This LTC benefit is built-in to the annuity, providing you with a combination of annuity value and additional long-term care benefits should you need them. This annuity initially credits interest to your Contract Premium at two interest rates. One rate is applied to the Long-Term Care Accumulated Value (LTCAV) and the other rate is applied to the Accumulated Value (AV). These funds are linked − a withdrawal from one will reduce the other proportionally so that when one fund is reduced to zero value, the other is also reduced to zero and the contract ends. Also available is an optional Continuation of Benefits (COB) for LTC. This option allows for continued benefit payment of covered expenses for qualified LTC service
Other Things You Should Know About This Contract:
Contract Premium: The single amount you pay for this contract.
Interest Rates: The Contract Premium grows as the Accumulated Value (AV) with a guaranteed minimum interest rate. At the same time, the Contract Premium grows at a higher interest rate for the Long-Term Care Accumulated Value (LTCAV), the amount used for qualified LTC expenses.
Guaranteed Interest Rate: Accumulated Value (AV): For the first contract year, the guaranteed and projected (non-guaranteed) interest rates are both 1.00%. After the first contract year, the guaranteed interest rate on the AV is 1.00%. LTC Accumulated Value (LTCAV): For the first five contract years, the guaranteed interest rate and the projected (non-guaranteed) interest rate are both 1.25%. After the fifth contract year, the guaranteed interest rate on the LTCAV is 1.00%. The rates in your contract may differ from this illustration.
Projected (Non-Guaranteed) Interest Rate: Accumulated Value (AV): The projected (non-guaranteed) interest rate on the AV in all years is 1.00%.
LTC Accumulated Value (LTCAV): The projected (non-guaranteed) interest rate on the LTCAV is 1.25% through year 20, then 1.00% thereafter. This reflects the default interest rate strategy based on your age.
Required Minimum Distributions: Certain tax-qualified annuities are subject to required minimum distributions which generally require that distributions begin no later than April 1 of the year following your attainment of age 70 ½ and that amounts be paid to you over a period not longer than your life expectancy.
Tax Information: The values illustrated do not reflect withdrawals. All AV withdrawals are subject to federal income tax, to the extent of the gain in the contract. Withdrawals prior to the owner reaching age 59 1/2 will generally be subject to an additional 10 percent federal income tax penalty. This illustration should not be relied on for tax advice. Any tax issues regarding this illustration or the contract should be reviewed with the owner’s tax advisors.
One America Annuity Care payment options:
This single premium annuity contract is a deferred annuity contract. This annuity contract guarantees an annuity income stream of payments upon the Maturity Date. Since payouts begin at a future date, you don’t pay taxes on the interest the annuity earns until the contract value is paid to you. The contract provides a choice of settlement options, shown below, so you can choose an income stream that is appropriate for your needs. The automatic annuity option is Installments for Life with a Period Certain of 10 years
What happens if the annuitant or owner of the One America Annuity Care passes away.
In the event you pass away all surrender charges will be waived, and access to the money will be granted to your beneficiaries. If any long term care benefits have been paid then the death benefit will be less any benefits paid.
What kind of interest rate does One America Annuity Care Guarantee?
One America initially has a 5 year rate guarantee and after that the interest rate can change based on the current interest rate environment but never below the contractual 1% guarantee. The Contract Premium grows as the Accumulated Value (AV) with a guaranteed minimum interest rate. At the same time, the Contract Premium grows at a higher interest rate for the Long-Term Care Accumulated Value (LTCAV), the amount used for qualified LTC expenses.
How do I pay for the One America Annuity Care?
You can use Qualified (IRA, SEP, Pension Plans, 401K’s) in the Annuity Care I and the Indexed Annuity Care and Non-Qualified (money you have saved) funds from many different sources for the both the Annuity Care I, Indexed Annuity Care and the Annuity Care II.
What kind of surrender charges does this policy have?
Well years 1-3 there is an 8% surrender charge, after which year 4-9 there is a 1% decrease per year, with year 10+ being surrender free
One America Annuity Care
What are some of One America Annuity Cares Long Term Care benefits?
1) Nursing Home Facility
2) Hospice Care
3) Respite Care and Bed Reservation
4) Adult Day Care
5) Assisted living facility
This annuity funds these things with the accumulated value of the policy, also referred to as the long-term care fund. There is a monthly benefit limit that cannot be overreached.
How long does this policy provide benefits?
After a 7 day elimination period the base contract will provide for 36 months of benefits.
What if I want more than 36 months of Long term care funds?
One America knows that some clients might need or want more than 36 months of benefits so you have an option called a Continuation of Benefits rider that allows you to choose between an additional 36 months or a lifetime benefit period. Once the original Long Term Care pool is used the annuitant continues to receive long term care benefits for either an additional 36 months or lifetime. For this additional benefit you can have it included as a cost with the single premium or pay for it with an ongoing annual premium for only the extended time. Depending on the clients finances I like to see them pay out of pocket for the continuation of benefits since that premium is guaranteed and as to not reduce the monthly benefit pool since it would be reduced since it would use some the the single deposit to offset this cost.
Who is the Ideal Candidate for One America Annuity Care?
Generally, most of our clients that are between 55-80 who may have had some health history (underwriting for the Annuity Care is easier than the Asset Care) or want to self fund their long-term care needs with a lump sum and preserve capital if they ever need to surrender the contract for liquidity.
One America Annuity Care II
OneAmerica Annuity Care II is a single premium deferred annuity that is really tailored to provide for a future long term care need for you and or your spouse.
- Single premium option — Use existing assets such as a CD, savings or an existing annuity as a one-time-only premium payment. You CANNOT use qualified money with the Annuity Care II..
- Added value for care — Your accumulated value grows at a guaranteed minimum interest rate; when you withdraw money for long-term care expenses your funds get credited at an even higher interest rate
- Tax-free benefits — Pay no income tax if you use your annuity for qualifying long-term care expenses, regardless of the deferred gain (subject to monthly maximums, and premiums funded after-tax)
How does One America Annuity Care II provide LTC Coverage?
Annuity Care II provides either 24 months(single) or 30 months(joint) of long term care expense coverage. Which allows you to be reimbursed the funds tax free for qualifying long term care expenses.
It also provides a Built-In Continuation of Benefits Rider. Which means once your annuity value is depleted from withdrawing funds for Long Term Care. The Continuation of Benefits rider then pays your long term care expenses for an additional 36 months.
If you choose to add the 5% inflation protection rider then the inflation protection amount is on the continuation of benefits only.
You have a 90-day elimination period before you can start withdrawing these funds.
Is there any growth in the account values?
The Annuity Care II is for someone that wants to maximize the potential long term care benefit pool. Because of the continuation of benefit rider that is built in, there is very little growth and other than the first 8 or 9 year (due to the surrender charge) it stay pretty much at the original deposit. If you add the inflation rider then it does not get to the same amount as the original deposit and in the later years it gets to as close as 95% of the deposit but you have to remember that at the same time you have leverage that deposit to as much as 5X the original deposit depending on the age you are when it is started.
Are there any Tax benefits?
As with the Annuity Care I any reimbursed benefits that provides for long term care would be income tax free.
All the monthly benefits withdrawn for Long Term Care needs, or the Continuation of benefits are Income Tax free .
Who is the Ideal Candidate for OneAmerica Annuity Care II?
As I mentioned earlier, the Annuity Care II is really designed to maximize the long term care benefit pool by transferring an existing annuity to OneAmerica or using existing funds they have.
After being in this business for over 30+ years I have helped dozens of clients with their annuities. A Lot of these were 401(k) rollovers, when they may have changed jobs and had to do something with that money or an IRA that they had and made contributions for a few years and then just stopped for many of different reasons.
As people go about their daily lives they will “lose track” of those or know that they are out there and get a statement once a year or quarterly depending on the type of annuity and don’t pay much attention to them. My job is to remind them of those accounts and for them to make sure that the particular annuity is where it needs to be. A lot of times when clients start to realize what they have it is about the same time they are maybe getting closer to the time that they want to retire and are making sure that the insurance they have is correct or what they might need to consider going forward.
As we have discussed in other blog posts, the insurance industry has made some great strides in offering different options when it comes to Long Term Care planning. One of these options is with OneAmerica Annuity Care line of products.
Clients will often tell me, “I don’t think we can afford a long term care policy” or “how are we supposed to pay for it”
This is where an existing annuity that they might have could help with either the OneAmerica Annuity Care, Annuity Care II or the Indexed Annuity Care, below we will go over the different ones.