The masses of mankind are unaware that this new law even exists. The result of this legislation from the federal governments perspective, of course, is that Uncle Sam is now encouraging seniors to rely on themselves to fund any potential long term care concerns. It is no secret that there simply will not be a budget to fund Medicaid facilities for the millions of aging boomers. Perhaps this is why they are foregoing millions in tax revenue by allowing this legislative change.
The tax savings, however, are not the only gift that the consumer receives in this new arrangement. Many of these "long term care annuities" actually have optional LTC riders built into them, called Continuation of Benefit Riders (C.O.B. riders) that extend the benefits usually on average by a factor of 2.
In a $100,000 annuity for a 65 year old female, for example, without the optional COB rider, she would receive her $100,000, plus interest, in a tax free manner for any long term care needs she may have, regardless of any taxable gain in her annuity contract.
