Before you can qualify for government assistance, Medicaid/MediCal require that you spend down your assets by paying for long term care out of your own pocket until you are basically impoverished. One way to protect your assets from these spend-down requirements is to purchase a state Long Term Care Insurance Partnership Program.
The Long Term Care Partnership Program is a public-private partnership between states and private insurance companies designed to provide asset protection in the unlikely event that your long term care insurance benefits are completely paid out. If your long term care insurance benefits ran out and you then had to rely on your own money to pay for care, the state would disregard your assets, dollar for dollar, in the amount that your long term care insurance policy had paid out when qualifying for public assistance. This ensures that Partnership Program policyholders never have to become impoverished before receiving state assistance even if their need for care outlasts the benefits of their long term care insurance policy.
Partnership long term care insurance plans are provided by most private long term care insurance companies and work exactly the same as non-partnership programs. The only difference is that State Partnership Program must meet the standard requirements outlined by the federal Deficit Reduction Act of 2005. Partnership Programs need to be federally tax-qualified and include the consumer protection provisions of the NAIC LTC Model Act and Model Regulation. Since most non-partnership long term care insurance policies already include these provisions, the only real difference is that State Partnership Programs must include age-appropriate inflation options.
- Applicants age 60 or younger must have Annual Compounded Inflation Protection.
- Applicants ages 61-76 must have Simple Inflation Protection
- Applicants age 76 or older must be offered inflation protection but don’t have to buy it.
It’s important to remember that Partnership Programs are designed to protect assets and not income. If your Partnership policy runs out and your income is too high, you still won’t qualify for Medicaid/Medical benefits.
If you move to another state, any long term care benefits paid by your Partnership policy will accumulate toward your asset protection. Never the less, you may have to move back to the state you bought your Partnership policy in to qualify for Medicaid/MediCal and take advantage of any asset protection you have gained. To make moving between states easier, some states have institued reciprocal Partnership Programs.
