While November holds a special status as Long-Term Care (LTC) Awareness Month, it is also when the IRS announces planning numbers for the upcoming year. And although we may not always link these two topics, this year they have become intertwined. In light of recent announcements, we wanted to take a moment and provide the following information to help you address retirement and LTC planning with your clients during end-of-year conversations:
The 2022 IRS numbers include — for the first time ever — a reduced LTC per diem amount of $390/day in 2022 (a 2.5% reduction from $400/day in 2021). This change applies to indemnity LTC riders. A John Hancock life insurance policy with our reimbursement LTC rider does not rely on the per diem limit, as benefits are reimbursed for qualified long-term care expenses incurred, up to the maximum coverage purchased. This allows clients to select their own LTC coverage, based on their planning needs, versus relying on the uncertain future per diem amount. Learn more about our LTC rider and stay tuned for upcoming blogs and discussions on this important development.
This time of year is also important for clients who may be age 72 and up and planning for RMDs. When doing this RMD planning with your clients, it would be a great time to ask what they plan on doing with those distributions. For those clients who don’t want or need their RMD, and whose intent is to leave their IRA as a legacy asset and/or to draw on in case of a long-term care need, consider talking to them about using their RMDs to fund a life insurance policy with an LTC rider. John Hancock’s LTC rider is available to applicants up to age 75, making this a short window of opportunity to help solve a very important need. View a sample JH Solutions here. If you would like to create your own, this can be found in JH Illustrator, or feel free to reach out to an AMC who can help run your next case.
LTC planning is about mitigating consequences — helping to protect a financial portfolio from the consequences of paying for long-term care over an extended period, and a client’s family from the emotional and physical consequences of providing care informally. To better understand long-term care and the need to plan, don’t miss this podcast on the informal-caregiving crisis.
IRS Announces 2022 Estate Planning Numbers
The numbers are in and here are the top two for estate planning in 2022:
Estate and gift tax lifetime exemption will increase to $12,060,000
The annual gift exclusion limit will increase to $16,000 per donee
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