Planning for your future is crucial, especially when considering long-term care. It’s a reality that over 70% of individuals aged 65 and above will require some form of long-term care services during their lifetime. Contrary to common misconceptions, Medicare and typical health insurance plans generally do not cover the extensive costs associated with long-term care. Therefore, proactive planning is essential to ensure you can access the care you may need without depleting your life savings.
The federal government, through the Deficit Reduction Act of 2005, has emphasized individual responsibility in funding long-term care. This act not only tightened the eligibility criteria for Medicaid-funded long-term care but also broadened the scope of Partnership Programs like the Nebraska Long Term Care Partnership Program.
What is the Nebraska Long-Term Care Partnership Program?
The Nebraska Long-Term Care Insurance Partnership program is a collaborative effort involving the state government, private insurance companies, and Nebraska residents. It aims to promote the purchase of long-term care insurance by making it more impactful. This is achieved by linking specific insurance policies, known as Partnership-qualified policies, with Medicaid benefits for individuals who require extended care beyond their insurance coverage.
Partnership-qualified policies adhere to specific criteria that can vary slightly from state to state. Generally, these policies offer comprehensive benefits, encompassing both institutional and home-based care services. They are also Tax Qualified, include specific consumer protection measures, and incorporate state-mandated provisions for inflation protection. Often, the primary distinction between a Partnership-qualified policy and a standard long-term care insurance policy lies in the mandated type and level of inflation protection.
It’s important to note that the State of Nebraska does not have a dedicated Partnership office. The program is administered through amendments to the state’s Medicaid laws and policy regulation by the state Department of Insurance.
If you are unsure whether your existing policy is Partnership-qualified, further resources are available to help you determine its status.
Asset Protection and the Nebraska Partnership Program
A key advantage of a Nebraska Partnership for Long-Term Care qualified policy is the ‘asset disregard’ feature when applying for Medicaid. This provision allows policyholders to retain assets that would typically be factored into Medicaid eligibility calculations. The amount of assets disregarded by Medicaid is directly equivalent to the total benefits paid out by your Partnership-qualified long-term care insurance policy.
Because these policies are designed with inflation protection, the actual benefits received can exceed the initial insurance coverage amount purchased, further enhancing asset protection.
For example, if you have a Partnership-qualified policy and receive $300,000 in benefits, you can apply for Medicaid and potentially retain $300,000 in assets beyond Nebraska’s standard Medicaid asset limit. For single individuals in most states, the standard asset threshold is often as low as $2,000. Asset limits are typically more generous for married couples.
In the past, trusts were sometimes used for asset protection. However, current regulations primarily recognize irrevocable trusts, and even these are subject to a 60-month “look-back” period. This means assets must be transferred into the trust at least 60 months before applying for Medicaid to be considered exempt – a timeframe fraught with uncertainty.
Nebraska Partnership policies offer a more direct and reliable asset protection mechanism. For every dollar of benefits paid out by your qualified policy, one dollar of your assets is disregarded when Medicaid assesses your eligibility. This direct offset allows you to preserve your assets without needing to spend them down to qualify for Medicaid assistance.
Furthermore, Partnership policies often include estate recovery protection. Estate recovery refers to the state’s right to seek reimbursement from your estate for Medicaid costs incurred for your care. With a Partnership policy, Nebraska may waive its right to recover assets from your estate up to the amount of benefits paid by the policy. It’s also worth noting that some states have filial responsibility laws, potentially allowing them to seek reimbursement from adult children for a parent’s Medicaid expenses. A Partnership policy can indirectly offer some protection against these concerns as well by reducing reliance on Medicaid.
Example of the Nebraska Partnership Program in Action
Consider John, who purchases a Nebraska Partnership for Long-Term Care policy with an initial value of $300,000. Years later, due to inflation adjustments and benefit utilization, his policy pays out a total of $400,000 in long-term care benefits. Eventually, John requires more care but has exhausted his insurance benefits and needs to apply for Medicaid.
If John’s policy was not Partnership-qualified, he might be limited to keeping only $2,000 in assets to qualify for Medicaid, potentially requiring him to deplete his savings significantly. However, because John invested in a Partnership-qualified policy, he can potentially retain $402,000 in assets ($2,000 standard Medicaid asset limit + $400,000 asset disregard) and still be eligible for Medicaid to cover his ongoing long-term care needs.
Addressing the Unfunded Liability of Long-Term Care
Long-term care represents a substantial unfunded liability for both families and government programs. Current legislation reflects a growing consensus that private insurance must play a leading role in financing long-term care for Americans. Despite this, many of the millions of Baby Boomers approaching retirement age have not adequately planned for potential long-term care expenses.
Moreover, retirees who once believed they could self-fund long-term care are now facing increased financial vulnerability due to market fluctuations and the need to protect diminishing assets. This makes the Nebraska Partnership for Long-Term Care Program an increasingly relevant and valuable tool for retirement and financial planning.
Benefits of Nebraska Partnership for Long-Term Care Policies
Nebraska 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 comparable benefits and options to non-Partnership long-term care insurance policies and are typically priced similarly.
Key benefits of Nebraska Partnership policies include:
- Flexible daily or monthly benefit amounts
- Choice of elimination period or deductible options
- Comprehensive coverage spanning home care, adult day care, and facility care
- Benefit period selections to create a substantial pool of money for care expenses
- Potential for discounts
A defining feature of Partnership policies is the mandatory age-appropriate inflation protection. This crucial element ensures that your policy benefits keep pace with the rising costs of long-term care over time. Specific inflation protection requirements for Partnership policies in Nebraska are as follows:
- Ages 60 and younger: Automatic compound inflation protection is mandatory.
- 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’s important to understand that certain inflation protection options, such as the Guaranteed Purchase Option (GPO) or Future Purchase Option (FPO), often considered optional as the insured can choose not to exercise them, may not qualify as sufficient inflation protection under Partnership guidelines, particularly for those under age 76.
Policy Underwriting and Qualification
To obtain a Nebraska Partnership for Long-Term Care policy, you must undergo medical underwriting, similar to applying for traditional long-term care insurance. Generally, younger applicants have a higher likelihood of qualifying at more favorable rates and with lower premiums. Resources are available to help you assess your potential health qualifications, including lists of uninsurable health conditions and medications.
We offer Nebraska Partnership for Long-Term Care Insurance Policies through state-approved insurance companies.
For detailed Medicaid information, you can visit Medicaid information by State.
To receive a personalized quote for Nebraska Partnership for Long-Term Care insurance from leading insurance providers, please Click here to complete our online quote request form.
