Planning for the future is crucial, especially when it comes to healthcare. It’s a sobering statistic that at least 70% of individuals over the age of 65 will require some form of long-term care services during their lifetime. Contrary to common misconceptions, standard health insurance and Medicare generally do not cover the extensive costs associated with long-term care. Therefore, proactive planning is not just advisable, it’s essential to ensure you can access the necessary care when you need it most, without depleting your life savings.
The Deficit Reduction Act of 2005 marked a significant shift in how the U.S. government views long-term care funding. The federal message became clear: financing long-term care is primarily an individual responsibility. This act made qualifying for Medicaid-funded long-term care more stringent and simultaneously broadened the scope of Partnership Programs like the Kansas Long-Term Care Partnership Program.
A Partnership Program is essentially a collaborative effort between a state government, private insurance companies operating within the state’s long-term care insurance market, and the residents of that state who choose to purchase specific long-term care Partnership policies. The core objective of the Kansas Long-Term Care Insurance Partnership is to provide meaningful long-term care insurance options, even for shorter policy terms, by integrating these specialized policies (known as Partnership-qualified policies) with Medicaid benefits for individuals who require extended care beyond their insurance coverage.
Partnership-qualified policies are designed to meet specific criteria, which can vary slightly from state to state. Generally, these policies are required to offer comprehensive benefits, encompassing both institutional and home-based care services. They must also be Tax Qualified, incorporate certain consumer protection measures, and include state-specific provisions for inflation protection. In many instances, the primary distinction between a Partnership-qualified policy and other long-term care insurance policies available in Kansas lies in the mandated type and level of inflation protection.
It’s important to note that the Kansas state government does not have a dedicated office specifically for the Partnership Program. The program’s implementation is managed through amendments to existing Medicaid laws, and the policies themselves are regulated by the state’s Department of Insurance.
If you are unsure whether your current long-term care insurance policy qualifies as a Partnership policy, further resources are available to help you determine its status.
Asset Protection and the Kansas Partnership Program
A key advantage of a Kansas Partnership for Long-Term Care qualified policy is the “asset disregard” feature. This provision modifies the standard Medicaid eligibility rules, allowing policyholders to protect a significant portion of their assets should they need to apply for Medicaid to cover additional long-term care expenses.
The asset disregard essentially permits you to retain assets that would typically be counted against Medicaid eligibility limits. The value of assets disregarded by Medicaid is directly equivalent to the total amount of benefits you actually receive from your Partnership-qualified long-term care insurance policy. Crucially, because these policies are required to include inflation protection, the total benefits paid out can exceed the original face value of the insurance protection you initially purchased, further enhancing asset protection over time.
For example, if you own a Partnership-qualified long-term care insurance policy and receive $300,000 in benefits, you become eligible to apply for Medicaid while legally retaining $300,000 in assets above and beyond Kansas’s standard Medicaid asset threshold. For single individuals in most states, this asset threshold is often as low as $2,000. Asset thresholds for married couples are typically more generous, but the Partnership program offers substantial additional protection regardless.
Historically, individuals attempted to shield assets through trusts. However, current regulations stipulate that only irrevocable trusts are potentially exempt from Medicaid asset calculations, and even these are subject to a stringent 60-month “look-back” period. This means assets must be transferred into the trust at least 60 months before applying for Medicaid to potentially avoid being counted. Predicting circumstances even 60 seconds into the future, let alone 60 months, is inherently uncertain, making this a risky strategy.
In contrast, a qualified Partnership policy provides a straightforward and reliable mechanism for asset protection. For every dollar of benefits paid out by the policy, one dollar of your assets is disregarded when Medicaid assesses your eligibility. This direct dollar-for-dollar asset disregard ensures you can preserve your financial security without having to exhaust your savings before qualifying for Medicaid assistance.
Furthermore, a Partnership policy offers protection against estate recovery. Estate recovery refers to the legal right of the state to seek reimbursement from your estate for long-term care costs paid by Medicaid after your death. Additionally, some states enforce filial responsibility laws, which could potentially obligate adult children to financially contribute to their parents’ Medicaid expenses. A Partnership policy can mitigate these risks, ensuring your estate and potentially your family’s finances are better protected.
Consider this example: John purchases a Kansas Partnership for Long-Term Care policy with an initial benefit value of $300,000. Years later, due to inflation adjustments and benefit utilization, he receives a total of $400,000 in benefits from his policy. Eventually, John requires more long-term care than his policy covers and needs to apply for Medicaid.
Without a Partnership-qualified policy, John would likely be limited to keeping only $2,000 in assets to qualify for Medicaid, forcing him to spend down his savings. However, because John invested in a Partnership-qualified policy, he can legally retain $402,000 in assets ($400,000 asset disregard + $2,000 standard Medicaid allowance) and still qualify for Medicaid assistance in Kansas.
The Growing Need for Long-Term Care Planning
Long-term care represents a significant unfunded liability for both families and government programs. Recent legislative trends underscore a growing consensus that private insurance must play a leading role in financing long-term care for Americans. Despite this, a considerable portion of the 78 million Baby Boomers approaching retirement age have not adequately planned for their potential long-term care needs.
Moreover, many retirees who previously believed they could self-fund long-term care expenses are now facing the reality of diminished assets due to market fluctuations and economic uncertainty. This makes relying solely on self-insurance for long-term care increasingly precarious.
Benefits of Kansas Partnership for Long-Term Care Policies
Kansas Partnership for Long-Term Care qualified policies are specifically designed to help individuals maintain their independence, preserve their quality of life, and protect their assets. These policies offer the same range of benefits and options as standard non-Partnership long-term care insurance policies and are typically priced comparably.
Key benefits of Kansas Partnership for Long-Term Care policies include:
- Flexible Benefit Options: Choice of daily or monthly benefit amounts to align with individual needs and budgets.
- Elimination Period/Deductible Choices: Options for selecting an elimination period (waiting period before benefits begin) or deductible to manage premium costs.
- Comprehensive Coverage: Coverage for a wide spectrum of care settings, including home care, adult day care, and care facilities.
- Benefit Period (Pool of Money): A defined pool of money available for long-term care expenses, allowing for flexible utilization over time.
- Potential Discounts: Availability of discounts based on various factors, such as spousal coverage or group affiliations.
A defining feature of Partnership policies is the mandatory age-appropriate inflation protection. This crucial component ensures that your policy benefits automatically increase over time to keep pace with the rising costs of long-term care services. Kansas Partnership policies mandate the following inflation protection at the time of policy issuance:
- Ages 60 and Younger: Automatic compound inflation protection is required.
- Ages 61–75: Any form of inflation protection is acceptable (compound or simple).
- Ages 76 and Older: Inflation protection is optional and at the policyholder’s discretion.
It is important to note that Guaranteed Purchase Options (GPO) or Future Purchase Options (FPO), while offered by many insurance carriers as inflation protection, do not typically qualify as sufficient inflation protection under Partnership guidelines unless you are age 76 or older. This is because these options are considered optional, as the policyholder can choose not to exercise them.
Policy Underwriting and Eligibility
To obtain a Kansas Partnership for Long-Term Care policy, you must undergo medical underwriting, similar to the process for traditional long-term care insurance. Generally, younger applicants have a higher likelihood of qualifying at more favorable rates and with lower premiums. To assess your potential eligibility, resources are available that outline uninsurable health conditions and medications.
We offer Kansas Partnership for Long-Term Care Insurance Policies through state-approved insurance companies.
