AAFMAA understands that the cost of long-term health care is a growing concern in America. In many cases, individuals and families must pay for long-term care out of their own pockets. AAFMAA is concerned about our members and the potential for long-term care due to disability or chronic illness.
To ensure a strong future for all members, the AAFMAA Value-Added Whole Life and Wealth Builder Life Insurance policies contain a Long Term Care Settlement Option (LTCSO) for no additional premium. LTCSO is not additional monetary benefit, but an early payout of a death benefit to the insured rather than to a designated beneficiary.
LTCSO allows the owner of the AAFMAA policy the option of converting the death benefit on an eligible insured life—normally payable only upon the death of the insured—into regular periodic payments prior to death, specifically to defray the cost of nursing home, custodial or home health care for the insured.
Beneficiaries continue to receive AAFMAA Survivor Assistance Services at the time of the member’s death, even if they elected LTCSO. Plus, AAFMAA membership continues during the payout period.
LTCSO is considered a qualified living benefit under IRS regulations. As such, the net amount of the death benefit is excluded from gross income and, as long as the total annual payments do not exceed IRS guidelines, it is not generally subject to federal or state income tax. AAFMAA provides an IRS Form 1099-LTC each year summarizing all distributions. If an irrevocable trust is the plan owner, a tax advisor should be consulted prior to exercising this option.
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If you think you may qualify and have an eligible AAFMAA policy, contact Policy Services toll-free at 1-800-336-4538 or email PolicyServices@aafmaa.com.
For more information or to apply for a Value-Added Whole Life or Wealth Builder Life Insurance policy call a Membership Coordinator at toll-free at 1-877-398-2263
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LTC. Alvaro G.
U.S. Army (Retired)