Long Term Care Insurance

What are "Partnership" Long Term Care Policies?

A Partnership Program is a collaboration or "Partnership" among a state government, the private insurance companies selling Long Term Care Insurance in that state, and state residents who buy Long Term Care Partnership policies. The purpose of the Partnership program is to make the purchase of shorter term more comprehensive Long Term Care Insurance meaningful by linking these special policies (called Partnership Qualified Long Term Care Policies) with Medicaid for those who continue to require care.

Partnership LTC policies must meet special requirements that vary from state to state. Most states require these policies to offer comprehensive benefits (cover institutional and home services), be Federally Tax Qualified, provide specific consumer protections, and include state specific provisions for inflation protection (although older issue ages may not be subjected to the inflation protection requirement). Often the only difference between a Partnership LTC policy and other Long Term Care Insurance policies sold in a state is the amount and type of inflation protection required by the state.

Partnership policies must be certified by the State as meeting the specific requirements for the Partnership Program. State insurance departments are responsible for ensuring that individuals who sell Partnership policies are trained and understand how these policies relate to public and private coverage options.

How Do Partnership LTC Policies Work?

Partnership Qualified Long Term Care Policies provide you, as the purchaser, with the right to apply for Medicaid under modified eligibility rules that include a special feature called an 'asset disregard'. This allows you to keep assets that otherwise would not be allowed if you need to apply, and qualify, for Medicaid in order to receive additional LTC services. The amount of assets Medicaid will disregard is equal to the amount of the benefits you actually receive under your Partnership qualified policy. Since these policies must include inflation protection, the amount of the benefits you receive can be higher than the amount of insurance protection you originally purchased.

If you have a Partnership Qualified Long Term Care Insurance policy and receive $100,000 in benefits, you can apply for Medicaid and, if eligible, retain $100,000 worth of assets over and above the State's Medicaid asset threshold. In most states the asset threshold is $2,000 for a single person (thresholds for married couples are typically more generous).

The following is an example of how a Partnership Qualified policy works. Let's say Joe, a single man, purchases a Partnership LTC policy with an initial policy limit of $100,000. Some years later he receives benefits under that policy up to the policy's lifetime maximum, which has now grown with inflation protection to $150,000. Joe still needs more LTC services and applies for Medicaid. If his policy were not Partnership Qualified, in order to qualify for Medicaid he would be entitled to keep only $2,000 in assets (he would have to "spend-down" any assets over this amount). However, because Joe bought a Partnership Qualified policy, if he needs to apply for Medicaid and is deemed eligible, he can keep $152,000 in assets and the State will not recover those funds after his death. However, any assets Joe has over and above the $152,000 would have to be spent in order for him to be eligible for Medicaid. He also would need to satisfy the income, general eligibility and functional eligibility requirements for Medicaid.

LTC Partnership programs are intended to help both individuals and the State. For individuals, it allows them to get and pay for services they need without having to spend all of their assets. For the State, it is anticipated that the amount of Medicaid dollars used for LTC services will decrease due to more individuals purchasing private plans.

Some Important Considerations for Consumers:

• It is important to know if the Long Term Care Insurance policy you buy is a Partnership Qualified policy. A Partnership Qualified policy is one that is certified by the State, and it must include the level of inflation protection coverage set by the State. Only if you have a Partnership Qualified policy will you be eligible for an asset disregard if and when you apply for Medicaid.
• Policies issued prior to a state Partnership Program's effective date will not be considered qualified; however there are circumstances under which you may be able to exchange a policy you previously purchased for one that is Partnership Qualified.
• It is necessary to buy your Partnership policy from an agent who is specially trained to sell that type of coverage. States with Partnership Programs have additional educational requirements for agents who wish to sell these policies.
• It is important to note that eligibility for Medicaid is not automatic. You still must apply and meet the income, functional and general eligibility requirements of the Medicaid program in your state. The LTC services provided by Medicaid vary by state and may not be the same as the services you are eligible to receive under your private Partnership Long Term Care Insurance policy (for example, many state Medicaid programs do not pay for room and board costs in an Assisted Living Facility even if you are also receiving personal care).
• States that have LTC Partnership programs are automatically considered to have "reciprocity" with each other and to honor the asset disregard you earned under a Partnership policy you purchased in a different state, yet States can "opt out" of this requirement at any time.

Which States Have Partnership Programs?

Most states now have an operational LTC Partnership Program. If you want to confirm that your state participates, contact us or contact your State's Department of Insurance.

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• Why You Need to Have a Plan for Long Term Care
• Won't the Medicare Program Pay for My Long Term Care Costs?
• Will Public Assistance (Medicaid) Pay for My Long Term Care Costs?
• What Is the Cost of LTC Services Where I Live?
• What Is Long Term Care Insurance and How Much Does It Cost?
• How to Design a Long Term Care Policy to Best Meet Your Needs
• What are "Partnership" Long Term Care Policies?
• Financial Strength Ratings for Top Long Term Care Insurance Companies