Long-term care partnership programs represent a strategic alliance between state governments and private insurance companies. These programs are designed to encourage individuals to purchase private long-term care insurance by offering a unique benefit: asset protection. Specifically tailored for middle-income Americans, these partnerships offer a way to safeguard assets while planning for potential long-term care needs. This article will explore the critical aspects of long-term care partnership programs, clarifying What Do Long-term Care Partnership Programs Link Together Quizlet and how they function to protect your financial future.
The Core Concept: Asset Protection and Medicaid
The cornerstone of long-term care partnership programs is the concept of “dollar-for-dollar” asset disregard. Imagine you purchase a partnership-qualified long-term care insurance policy. If, in the future, you require long-term care and your policy pays out benefits, you essentially “earn” asset protection from Medicaid equal to the amount your insurance policy paid.
For instance, consider the example of someone whose policy pays out $200,000 in long-term care benefits. This individual would then be allowed to retain an additional $200,000 in assets beyond the standard Medicaid asset limits and still qualify for Medicaid assistance if their long-term care needs exceed their insurance coverage. This feature is a significant incentive, allowing individuals to protect a substantial portion of their savings and investments while planning for long-term care. Furthermore, this asset protection often extends to estate recovery, shielding these assets from Medicaid claims after death.
The Genesis and Evolution of Partnership Programs
The Long Term Care Partnership Program’s origins trace back to the late 1980s when it began as a pilot project funded by the Robert Wood Johnson Foundation. Initially, four states – California, Connecticut, Indiana, and New York – pioneered these programs. Connecticut took the lead, being the first state to offer partnership-qualified policies in 1992.
In 2006, the Deficit Reduction Act (DRA) broadened the landscape, enabling more states to establish Partnership programs. Since then, numerous states have adopted the legislative framework to offer these programs to their residents. It’s important to note that while the DRA aimed for greater uniformity, Long Term Care Partnership Programs are not entirely consistent across all states. Programs established under the DRA generally exhibit more similarities compared to the original four states, but new DRA states still have crucial design decisions to make, leading to variations in program specifics.
State-by-State Availability and Reciprocity
The availability of Long-Term Care Partnership Insurance varies by state. As of March 2014, a significant number of states had approved and implemented partnership programs.
| 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 | 17/01/2010 | Yes |
| Wisconsin | 01/01/2009 | Yes |
| Wyoming | 06/29/2009 | Yes |
“Effective Date” indicates when the U.S. Department of Health & Human Services approved the State Plan Amendment. “Original Partnership” denotes one of the initial four Partnership States.
“Reciprocity” is another crucial aspect. It refers to whether a state will recognize partnership policies purchased in other DRA partnership states for asset disregard purposes when applying for Medicaid. Most DRA states, along with New York, Indiana, and Connecticut, offer reciprocity. California is a notable exception. Reciprocity is vital for individuals who may move to a different state in the future, ensuring their partnership policy benefits remain valid.
Understanding the Costs of Partnership Insurance
The cost of Long-Term Care Partnership Insurance is influenced by several factors, including age, health status, and the policy benefits selected. Data from a 2012 New York State Long-Term Care Partnership report provides insights into the annual premium ranges:
- Ages 50-54: $1,384 – $11,667 per year
- Ages 55-59: $1,756 – $12,864 per year
- Ages 60-64: $1,863 – $9,490 per year
- Ages 65-69: $3,321 – $10,002 per year
These ranges reflect the varying policy benefits chosen by individuals and their health conditions at the time of application. Furthermore, the 2014 Long-Term Care Insurance Price Index by the American Association for Long-Term Care Insurance highlighted a significant price variation (40-100%) for comparable coverage. This underscores the importance of comparison shopping to secure the most cost-effective partnership policy.
Frequently Asked Questions about Partnership Policies
Q: If I buy a partnership policy in one state and move to another, will it still qualify for Medicaid protection?
A: Generally, yes, especially if both states are DRA Partnership states with reciprocity. However, it’s crucial to confirm the reciprocity rules of both the original and new state, particularly considering exceptions like California among the original four partnership states.
Q: Do most partnership states have reciprocity agreements?
A: Yes, most states with partnership policies do have reciprocity. The original four partnership states (California, Connecticut, Indiana, and New York) are again exceptions to some rules. California notably does not offer reciprocity.
Q: What inflation protection is required for Partnership policies?
A: Inflation protection requirements vary by state. Most states allow any compound Cost of Living Adjustment (COLA) under age 61. For ages 62-75, any automatic COLA is typically acceptable. After age 75, no COLA is usually mandated. Guaranteed Purchase Options (GPO) generally do not qualify a policy for partnership status in most states. Again, the original four states have specific rules, often requiring 5% compound inflation, though details vary by state and age.
Q: Do I need to specifically request a Partnership-eligible policy?
A: It depends on the state. In the original four Partnership states, separate policy forms are often required. In other states, if a policy is filed as a Partnership policy and includes the necessary COLA rider, it automatically qualifies. Policyholders typically receive confirmation of their policy’s partnership qualification upon delivery. It’s essential to ensure the insurance carrier has filed their policies as Partnership-eligible in your specific state.
Coverage Levels in Partnership Policies
Most DRA Partnership policies are comprehensive, covering care in various settings, including home care and skilled nursing facilities. Benefits are typically defined in dollar amounts. A January 2014 report summarized 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) provides insights into daily benefit amounts:
- $170 per day: 11.28%
- $180 per day: 35.50%
- $190 per day: 0.89%
- $200 per day: 31.00%
- $210 per day: 0.60%
- $220 per day: 3.44%
- $230 per day: 2.87%
- $240 per day: 1.21%
- $250 per day: 8.03%
- Over $250 per day: Balance
These figures illustrate the range of coverage levels individuals choose when purchasing Long-Term Care Partnership Insurance, reflecting diverse needs and financial considerations.
Conclusion: Is a Partnership Policy Right for You?
Long-term care partnership programs offer a compelling solution for middle-income individuals seeking to protect their assets while preparing for potential long-term care expenses. By linking private long-term care insurance with Medicaid asset disregard, these programs provide a valuable safety net. Understanding the specifics of partnership programs, including state availability, reciprocity, policy costs, and coverage levels, is crucial for making informed decisions. If you are considering long-term care insurance and asset protection, exploring partnership-qualified policies is a worthwhile step in securing your financial future and peace of mind.
To discover if you qualify for long-term care insurance and explore coverage options, you can click here to complete a simple online questionnaire to connect with a knowledgeable expert in your area. This is a no-obligation way to gain personalized information and guidance.
