Long-Term Care Partnership Programs represent a strategic alliance between private insurance providers and state Medicaid programs. These partnerships are designed to encourage individuals to secure private long-term care insurance, thereby sharing the financial responsibility of long-term care with individuals and reducing the strain on state-funded Medicaid. For those contemplating future Medicaid eligibility for long-term care, understanding how Long Term Care Policies Used In Partnership Programs Must function is crucial for asset protection.
Participating in a Partnership Program offers a significant advantage: it safeguards a portion, and in some instances all, of the participant’s assets from Medicaid’s stringent asset limitations. Crucially, these protected assets are also shielded from Medicaid’s Estate Recovery Program (MERP), which seeks to recoup long-term care expenses from the estates of deceased beneficiaries. Partnership Programs, therefore, serve as an effective Medicaid asset protection strategy, particularly beneficial for healthy seniors planning for potential long-term care needs without immediate urgency.
Individuals enrolled in LTC Partnership Programs are permitted to retain assets exceeding standard Medicaid limits.
Originating in 1992 with pilot programs in California, Connecticut, Indiana, and New York, the expansion of LTC Partnership Programs was initially halted by the 1993 Omnibus Budget Reconciliation Act (OBRA). However, the 2005 Deficit Reduction Act (DRA) paved the way for nationwide implementation, granting all states the option to establish these programs.
Currently, Long-Term Care Partnership Programs are prevalent across most of the United States. Notable exceptions include the District of Columbia, Alaska, Hawaii, Massachusetts, Mississippi, Utah, and Vermont. It’s worth noting that while Massachusetts lacks a formal Partnership Program, it offers a MassHealth Qualified Policy, which provides specific Medicaid protections to policyholders.
To ascertain the availability of a Long-Term Care Partnership Program in a specific state, it is advisable to contact the state’s Department of Insurance. Many programs operate under state-specific names, such as the Indiana Long Term Care Insurance Program (ILTCIP), the New York State Partnership for Long-Term Care (NYSPLTC) Program, and the Arizona Long Term Care Partnership Program.
Long-term care within these programs encompasses a broad spectrum of supportive services for individuals unable to perform daily living activities independently, including personal care, home health aides, adult day care, assisted living, memory care, and skilled nursing facility care.
Benefits of Long Term Care Partnership Programs
The primary advantage of participating in a Long-Term Care Partnership Program is asset protection for Medicaid applicants. This protection extends to both savings and countable assets from Medicaid’s asset limits and the home and remaining assets from Estate Recovery. It’s important to note that while assets are protected, income is not.
Most states, excluding California, impose an asset limit for long-term care Medicaid, typically around $2,000. Certain assets like a primary residence, household items, personal effects, and a vehicle are typically exempt. Applicants with assets exceeding the limit must “spend down” excess assets to qualify for Medicaid.
Medicaid’s Look-Back Period, which is generally 5 years, scrutinizes asset transfers made prior to the Medicaid application to prevent gifting or selling assets below market value to meet asset limits. Violations can result in Medicaid ineligibility penalties. New York currently waives the Look-Back Period for home and community-based services but plans to implement a 2.5-year period in 2025. California, having eliminated its asset limit on January 1, 2024, exempts asset transfers made on or after this date from the Look-Back Rule.
Qualified State Long-Term Care Partnership Programs protect assets equal to the amount the partnership policy has paid out for long-term care. This means individuals can retain assets beyond the standard Medicaid limit without needing to spend them down. The protected amount directly correlates with the benefits paid out by the Long-Term Care Partnership Policy.
Asset protection through Partnership Programs also extends to Medicaid Estate Recovery. Typically, a recipient’s home is the most significant remaining asset subject to recovery. While a home is usually exempt from asset limits during a recipient’s life, it is not exempt from Estate Recovery. Partnership Programs allow individuals to designate their home as a “protected” asset, shielding it from Estate Recovery. This ensures the home can be passed to heirs instead of being sold for Medicaid reimbursement.
Example: Consider Sarah, who has a Long-Term Care Partnership Policy that disbursed $150,000 for her care. This policy protects $150,000 of her assets from Medicaid’s asset limit and Estate Recovery. With a standard asset limit of $2,000, Sarah can retain $152,000 in assets. If her assets include a $100,000 home, $50,000 in investments, and $2,000 in savings, she can protect her home and investments, passing them on to her family after her passing.
How LTC Partnership Programs Work?
To leverage asset protection through LTC Partnership Programs, individuals must have purchased a Qualified Long-Term Care Insurance Policy, often referred to as a Partnership Policy, and received benefits from it. The fundamental principle is dollar-for-dollar asset protection: for every dollar the policy pays out for long-term care, a corresponding dollar of assets is shielded from Medicaid.
A common question is whether a Partnership Policy purchased in one state provides asset protection when applying for Medicaid in another. This depends on several conditions. Both states must have Partnership Programs, the policyholder must meet the Partnership Program requirements of the state where they apply for Medicaid, they must satisfy Medicaid eligibility criteria in that state, and the two states must have a reciprocal agreement recognizing cross-state asset protection.
Regarding state-specific Partnership Program requirements, some states mandate that policyholders “exhaust” their insurance benefits completely before applying for Medicaid. This means the entire policy benefit amount must be paid out prior to Medicaid application. Conversely, other states do not require benefit exhaustion; asset protection is granted for the amount the policy paid out up to the application date.
LTC Partnership Program Eligibility Criteria
How Far in Advance Do You Need to Buy the Policy?
Prospective participants in Long-Term Care Partnership Programs should purchase a Partnership Policy while in relatively good health and before long-term care becomes an immediate necessity. Enrolling in the program is not feasible for individuals already residing in a nursing home or for those diagnosed with conditions like Alzheimer’s or dementia at the time of application. Insurance companies typically require health screenings before issuing long-term care insurance policies.
Eligibility for LTC Partnership Programs is twofold, encompassing both the criteria for a Qualified Long-Term Care Insurance Policy and the general eligibility requirements for long-term care Medicaid. While general guidelines are outlined below, specific requirements can vary significantly by state.
Partnership Program / Policy Criteria
To qualify for a Long-Term Care Partnership Program, certain policy criteria must be met:
- State Partnership Program: The individual’s state of residence must have an active Partnership Program.
- Partnership-Qualified Policy: A partnership-qualified policy must be purchased from a private insurer. Both the insurer and the specific long-term care policy must be approved by the state Partnership Program. Non-partnership long-term care insurance policies, while providing coverage, do not offer Medicaid asset protection or Estate Recovery protection.
- Reasonable Health: Applicants must be in reasonably good health to secure coverage; otherwise, insurance may be denied.
- Inflation Protection: Partnership-qualified policies must include inflation protection, adjusting benefit amounts to reflect rising long-term care costs. This ensures the total payout may exceed the initially purchased benefit amount. An exception exists for individuals over 75, for whom inflation protection is not mandatory.
- Federally Tax-Qualified: The Partnership Policy must be a federally tax-qualified long-term care plan, allowing a portion of the premium to be tax-deductible.
- Premium Affordability: The individual must be able to afford the ongoing monthly or annual premiums.
- Reciprocity or State of Purchase: To ensure asset protection for asset limits and Medicaid Estate Recovery, long-term care Medicaid must be received either in the state where the partnership policy was purchased or in a state with a reciprocal agreement with the purchasing state.
Long Term Care Medicaid Eligibility Criteria
In addition to policy requirements, individuals must also meet standard long-term care Medicaid eligibility criteria:
- Functional Need: A functional need for long-term care must be established, often requiring a Nursing Home Level of Care determination.
- Limited Monthly Income: Monthly income is typically capped, generally at $2,901 in 2025, though this figure can vary.
- Limited Countable Assets: Countable assets must not exceed $2,000 in most states. A Partnership Policy allows for additional asset protection beyond this limit. California, with no asset limit, allows qualification regardless of asset levels.
It is important to consult state-specific Medicaid long-term care requirements for precise details. Exceeding income and/or asset limitations does not automatically disqualify applicants, as Medicaid planning strategies can be employed.
LTC Partnership Programs Costs
The cost of Long-Term Care Partnership Policies is variable, influenced by factors such as the insurance provider, the purchaser’s age (younger individuals pay lower premiums), marital status (couples often receive lower premiums), gender (women’s coverage tends to be more expensive), and the extent of coverage desired.
According to the American Association for Long-Term Care Insurance (AALTCI) data from 2024, a traditional long-term care insurance policy with $165,000 in coverage averages $950 annually ($79.16 monthly) for a 55-year-old single male. For a woman of the same age and coverage, the average annual premium is $1,500 ($125 monthly). For a 55-year-old married couple with $165,000 coverage each, the average annual cost is $2,080 ($173.33 monthly). Adding inflation protection increases costs. For instance, with a 2% benefit increase option and $165,000 initial coverage, the annual premium for a 55-year-old single man averages $1,750 ($145.83 monthly), for a woman $2,800 ($233.33 monthly), and for a couple $3,875 ($322.91 monthly).
Which States Have LTC Partnership Programs?
Long-Term Care Partnership Programs are available in most states. Currently, Alaska, Hawaii, Massachusetts, Mississippi, Utah, Vermont, and Washington D.C. do not have programs. Mississippi has passed legislation to establish a program, with anticipated implementation soon. Utah authorized a Partnership Program in 2014, but it remains unimplemented due to lack of insurer participation. To confirm program availability and details, contact your state’s Department of Insurance.
How to Get Started
To initiate the process, contact your state Department of Insurance to confirm the existence of a Long-Term Care Partnership Program and to obtain information on participating insurance companies and Partnership Policies. Alternatively, your state Medicaid agency can provide helpful resources and guidance.
