To encourage more Americans to plan for the risk of needing long-term care Congress passed the Deficit Reduction Act of 2005 (DRA). The new law permits the creation of beneficial public – private partnerships; a joint-effort between states and insurance companies who offer Qualified Long-Term Care Insurance Partnership Policies.
These insurance companies have agreed to offer high-quality, affordable long-term care insurance protection that meets the stringent requirements set by the federal legislation and states.
Partnership policies not only offer benefits to pay for long-term care costs. They offer the special additional benefit of Asset Protection should you ever need to apply for Medicaid assistance.
How Can Partnership Policies Benefit You?
Long-term care insurance is a financial planning tool that can help protect your life’s hard earned assets and income. It can help you maintain your freedom of choice, independence and standard of living. By choosing to purchase a qualified partnership long-term care insurance policy, you receive additional protection of your assets.
Here’s how it works. You purchase a qualified partnership long-term care insurance policy. The State provides Medicaid Asset Protection, which allows you to protect additional assets from the Medicaid “spend down” rules, should you need to qualify in the future. Medicaid has limits on how much you can keep in assets and income and still qualify – if you have too much, you are required to “spend down” those assets before you can qualify for Medicaid.
Under a qualified partnership policy, personal assets in the amount of the total benefits paid are disregarded when Medicaid asset eligibility is calculated. For each dollar of benefits paid, one dollar of assets is not counted toward the eligibility limit. This means you get to keep those assets and don’t have to spend them before qualifying for Medicaid.
It also means that the state will not seek to recover those amounts from your estate. Medicaid asset limits vary from state to state. The amount you can protect because of your qualified partnership policy’s paid benefits is in addition to the amount otherwise allowed under Medicaid. This may be especially important for your spouse living at home. Medicaid eligibility does also consider income and any income you receive will still need to be used to pay for your long-term care, subject to state Medicaid requirements.
Not all states participate in the Partnership program and some states (CA, NY, CT, IN) have their own requirements for a policy to qualify for Partnership Asset Protection. Check out the website partnershipforlongtermcare.com to see if your state participates.