The landscape of long-term care in the United States can be complex, particularly when considering how to finance these services without depleting your life savings. For middle-income Americans, the Long Term Care Partnership Program offers a unique solution, blending private long-term care insurance with Medicaid asset protection. Understanding which states participate in this program is crucial for those seeking to safeguard their assets while planning for future care needs.
Understanding the Long-Term Care Partnership Program
Established through the Deficit Reduction Act (DRA) of 2006, the Long Term Care Partnership Program is a collaborative effort between state governments and the federal government. Its primary goal is to encourage individuals to purchase private long-term care insurance. This initiative is designed to broaden access to long-term care coverage and alleviate the financial strain on Medicaid systems.
The core incentive of a Partnership-qualified (PQ) long-term care insurance policy lies in its asset protection feature. This is often referred to as “dollar-for-dollar” asset disregard. For every dollar that a PQ policy pays out in long-term care benefits, the policyholder can protect an equivalent amount of assets should they later need to apply for Medicaid to cover further care costs.
Consider this scenario: Imagine John purchases a PQ policy, and years later, he requires long-term care. His policy disburses $200,000 in benefits. Thanks to the Partnership Program, John is entitled to shield an additional $200,000 of his assets beyond the standard Medicaid asset limits. This protected amount is disregarded when determining his Medicaid eligibility and is also shielded from Medicaid estate recovery after his passing.
Long Term Care Insurance Partnership: State Participation and Reciprocity
The Long Term Care Partnership Program is not federally mandated, meaning its implementation is at the discretion of each state. While the DRA of 2006 spurred significant adoption, the program’s availability and specific rules can vary from state to state.
Initially, the program began as a demonstration project in the late 1980s with Connecticut, California, Indiana, and New York as the pioneering states. The DRA expanded the opportunity for more states to participate. It’s important to note that while DRA Partnership states share more uniformity than the original four, each state still retains some flexibility in program design.
As of the latest updates, a significant number of states have active Long Term Care Partnership programs. The following table provides a state-by-state overview, including the effective date of their Partnership program and their reciprocity status. Reciprocity refers to whether a state will recognize Partnership policies purchased in other DRA Partnership states for asset disregard purposes when applying for Medicaid. All DRA states, along with New York, Indiana, and Connecticut, generally offer reciprocity, with California being a notable exception.
| State | Effective Date | Policy Reciprocity |
|---|---|---|
| Alabama | 03/01/2009 | Yes |
| Alaska | Not Filed | — |
| Arizona | 07/01/2008 | Yes |
| Arkansas | 07/01/2008 | Yes |
| California | Original Partnership | No |
| Colorado | 01/01/2008 | Yes |
| Connecticut | Original Partnership | Yes |
| Delaware | 11/01/2011 | Yes |
| District of Columbia | Not Filed | — |
| Florida | 01/01/2007 | Yes |
| Georgia | 01/01/2007 | Yes |
| Hawaii | Pending | — |
| Idaho | 11/01/2006 | Yes |
| Illinois | Pending | — |
| Indiana | Original Partnership | Yes |
| Iowa | 01/01/2010 | Yes |
| Kansas | 04/01/2007 | Yes |
| Kentucky | 06/16/2008 | Yes |
| Louisiana | 10/01/2009 | Yes |
| Maine | 07/01/2009 | Yes |
| Maryland | 01/01/2009 | Yes |
| Massachusetts | Proposed | — |
| Michigan | Work stopped | — |
| Minnesota | 07/01/2006 | Yes |
| Mississippi | Not Filed | — |
| Missouri | 08/01/2008 | Yes |
| Montana | 07/01/2009 | Yes |
| Nebraska | 07/01/2006 | Yes |
| Nevada | 01/01/2007 | Yes |
| New Hampshire | 02/16/2010 | Yes |
| New Jersey | 07/01/2008 | Yes |
| New Mexico | Not Filed | — |
| New York | Original Partnership | Yes |
| North Carolina | 03/07/2011 | Yes |
| North Dakota | 01/01/2007 | Yes |
| Ohio | 09/10/2007 | Yes |
| Oklahoma | 07/01/2008 | Yes |
| Oregon | 01/01/2008 | Yes |
| Pennsylvania | 09/15/2007 | Yes |
| Rhode Island | 07/01/2008 | Yes |
| South Carolina | 01/01/2009 | Yes |
| South Dakota | 07/01/2007 | Yes |
| Tennessee | 10/01/2008 | Yes |
| Texas | 03/01/2008 | Yes |
| Utah | Not Filed | — |
| Vermont | Not Filed | — |
| Virginia | 09/01/2007 | Yes |
| Washington | 01/01/2012 | Yes |
| West Virginia | 01/17/2010 | Yes |
| Wisconsin | 01/01/2009 | Yes |
| Wyoming | 06/29/2009 | Yes |
Note: It’s important to verify the most current status with official state resources as program details and participation can evolve.
The Cost of Long-Term Care Partnership Insurance
The price of Long-Term Care Partnership insurance is influenced by various factors, including age, health status, and the specific policy benefits chosen. A report from the New York State Long-Term Care Partnership (2012) provides a cost range based on age:
- Ages 50-54: $1,384 to $11,667 annually
- Ages 55-59: $1,756 to $12,864 annually
- Ages 60-64: $1,863 to $9,490 annually
- Ages 65-69: $3,321 to $10,002 annually
These ranges illustrate the impact of benefit selections and individual health profiles on premiums. Furthermore, the American Association for Long-Term Care Insurance’s 2014 Long-Term Care Insurance Price Index highlighted a significant price variation (40-100%) for comparable coverage across different insurers. This underscores the critical importance of comparison shopping to secure the most suitable and cost-effective Partnership policy.
Common Questions About Long-Term Care Partnership Programs
Q: If I purchase a Partnership-eligible policy in one state and then move to another, will my policy still qualify for Medicaid asset protection?
A: Generally, yes, especially if moving between DRA Partnership states. Reciprocity is a key feature of most Partnership programs. However, it’s crucial to confirm the specific reciprocity rules of both your original and new state, as exceptions exist, particularly with the original four Partnership states. California, for example, does not offer reciprocity.
Q: Do Partnership policies typically require a 5% compound inflation protection, or are other options available?
A: Inflation protection requirements vary by state. While some states may mandate 5% compound inflation, especially for younger buyers, others allow for options like 3% compound or Guaranteed Purchase Options (GPO). Age often plays a role; for instance, some states have different requirements for those under 61, between 62-75, and over 75. GPOs, however, often do not qualify a policy for Partnership status in most states. Again, the original four states (California, Connecticut, Indiana, New York) often have unique rules regarding inflation protection.
Q: Do I need to specifically request a Partnership-eligible policy, or are most long-term care insurance policies automatically Partnership-qualified?
A: It’s essential to specifically inquire about a Partnership-eligible policy. While some insurers automatically designate filed Partnership policies as such, this is not universally the case. In the original four Partnership states, distinct policy forms are typically required. In other states, policyholders often receive a confirmation letter stating their policy’s Partnership qualification. Not all insurance carriers offer Partnership-qualified policies in every state, making it crucial to confirm both policy and carrier eligibility.
How Much Long-Term Care Partnership Insurance Do People Buy?
The majority of DRA Partnership policies are comprehensive, covering care in various settings, including home care and skilled nursing facilities. Benefits are usually dollar-denominated. A January 2014 report indicated the following distribution of maximum policy benefits purchased:
- Less than $109,599: 10%
- $109,600 – $146,099: 8%
- $146,100 – $182,599: 12%
- $182,600 and above: 54%
- Unlimited: 14%
Data from the California Long-Term Care Partnership (April-June 2013) also provides insights into daily benefit amounts:
- $170 per day: 11.28%
- $180 per day: 35.50%
- $190 per day: 00.89%
- $200 per day: 31.00%
- $210 per day: 00.60%
- $220 per day: 03.44%
- $230 per day: 02.87%
- $240 per day: 01.21%
- $250 per day: 08.03%
- Over $250 per day: Balance of policies
- More than $200: 11% of policies
Conclusion: Is a Long-Term Care Partnership Policy Right for You?
Long-Term Care Partnership Programs offer a valuable strategy for middle-income individuals seeking to protect their assets while preparing for potential long-term care expenses. By purchasing a Partnership-qualified insurance policy, you gain peace of mind knowing you have a financial safety net for care costs and asset protection should you require Medicaid assistance in the future.
To determine if a Long-Term Care Partnership policy is the right choice for your needs, it’s recommended to explore your options and understand the specifics of your state’s program. Connect with a long-term care insurance specialist to discuss your individual circumstances and receive personalized guidance. Click here to complete our simple online questionnaire and take the first step towards securing your future long-term care plan.
