Long term care planning is a critical aspect of financial security, particularly for middle-income Americans. As healthcare costs rise, understanding programs like Long Term Care Partnership Programs becomes essential. These programs, available in specific States With Long Term Care Partnership Programs, offer a unique approach to protecting your assets while preparing for potential long term care needs. This guide will delve into the specifics of these partnership programs, how they work, and which states currently participate.
Understanding the Long-Term Care Partnership Program
The Long Term Care Partnership Program is a collaborative effort between state governments and the federal government, designed to encourage individuals to purchase private long term care insurance. The core incentive behind these programs is asset protection. By purchasing a Partnership-qualified long term care insurance policy, individuals can gain Medicaid asset disregard. This means that if you ever need to apply for Medicaid to cover long term care expenses, a portion of your assets will be protected, directly proportional to the benefits paid out by your partnership policy.
This concept originated from the Deficit Reduction Act (DRA) of 2006, which empowered states to implement these innovative programs. The aim is to expand access to long term care services by making private insurance more attractive and providing a safety net through Medicaid without requiring individuals to deplete all their savings.
How Partnership Policies Provide Asset Protection
The asset protection offered by Partnership policies is often described as “dollar-for-dollar” asset disregard. For every dollar your Partnership-qualified long term care insurance policy pays out in benefits, you get to protect a corresponding dollar of your assets should you need to apply for Medicaid.
Let’s illustrate this with an example: Imagine John from a state with a long term care partnership program purchases a qualified policy. Years later, John requires long term care and his policy pays out $200,000 in benefits. Thanks to the Partnership program, John can now shield an additional $200,000 of his assets beyond the standard Medicaid asset limits. This protected amount is disregarded when Medicaid determines his eligibility, allowing him to qualify for Medicaid while preserving a significant portion of his savings and estate. Furthermore, this asset protection extends to estate recovery, safeguarding these assets even after death.
A Look at the History of Partnership Programs
The Long Term Care Partnership Program began as a pilot project in the late 1980s, funded by the Robert Wood Johnson Foundation. Initially, four states – California, Connecticut, Indiana, and New York – pioneered these programs. Connecticut was the first to offer Partnership-qualified policies in 1992.
While the concept gained traction, federal legislation in 1993 (OBRA 93) temporarily hindered expansion to other states unless their Medicaid State Plan Amendment (SPA) was already approved. However, the DRA of 2006 revitalized the Partnership Program, paving the way for more states to adopt these initiatives.
It’s important to note that while the DRA brought about greater uniformity among newer Partnership programs, variations still exist across different states with long term care partnership programs. Experts highlight that DRA-era states exhibit more consistency than the original four pilot states, but each state still retains some autonomy in designing program specifics.
Which States Currently Offer Partnership Programs?
The availability of Long Term Care Partnership Programs varies by state. Below is a table indicating the status of these programs across the United States, based on the latest information available. Please note that program status can change, and it’s always advisable to verify the most current information with your state’s Department of Health and Human Services or a qualified long term care insurance specialist.
Effective Date: Indicates the date the U.S. Department of Health & Human Services approved the State Plan Amendment. “Original Partnership” denotes one of the initial four states.
Reciprocity: Refers to whether a state honors Partnership policies issued by other DRA partnership states for asset disregard purposes when applying for Medicaid. Most DRA states, along with New York, Indiana, and Connecticut, have reciprocity. California is 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 |
(Last updated March 2014 – Please verify current status as information may have changed.)
The Cost of Long-Term Care Partnership Insurance
The price of Long-Term Care Partnership insurance policies can vary significantly. Factors influencing the cost include your age, health status, the level of benefits you choose, and specific policy features.
Data from a 2012 New York State Long-Term Care Partnership report illustrates the range of annual premiums:
- Ages 50-54: $1,384 to $11,667 per year
- Ages 55-59: $1,756 to $12,864 per year
- Ages 60-64: $1,863 to $9,490 per year
- Ages 65-69: $3,321 to $10,002 per year
These ranges reflect the diverse policy benefits selected by individuals and their health at the time of application. Moreover, the American Association for Long-Term Care Insurance’s 2014 Long-Term Care Insurance Price Index highlights a considerable price variation (40-100%) for similar coverage across different insurers. This underscores the 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 buy a partnership-eligible policy in one state with a program and then move to another state, will my policy still qualify for Medicaid protection?
A: Generally, yes. Most states with long term care partnership programs offer reciprocity, meaning they will honor partnership policies from other DRA partnership states.
Q: Do most states with partnership policies have reciprocity agreements?
A: Yes, reciprocity is common. Exceptions primarily involve the original four Partnership states, particularly California, which does not offer reciprocity. Connecticut and Indiana offer reciprocity if the new state also participates. New York offers dollar-for-dollar reciprocity.
Q: What inflation protection is required for Partnership policies in most states?
A: Most states do not mandate 5% compound inflation protection across all ages. For individuals under 61, any Compound Cost of Living Adjustment (COLA) is usually acceptable. Between ages 62 and 75, any automatic COLA rider may qualify. After age 75, there is typically no inflation protection requirement to qualify for partnership. Guaranteed Purchase Options (GPO) generally do not qualify a policy for partnership in most states. However, the original four states have specific rules, often requiring 5% compound inflation, especially for younger buyers.
Q: Do I need to specifically request a Partnership-eligible policy, or are most policies automatically qualified?
A: It’s essential to confirm. If a policy is filed as a Partnership policy and includes the necessary COLA rider, it will generally qualify. The original four Partnership states often utilize separate policy forms. In other states, policyholders usually receive a letter confirming their policy’s Partnership qualification upon delivery. It’s crucial to verify that the insurance carrier has filed their policies as Partnership-qualified in your specific state.
How Much Partnership Insurance Do Buyers Typically Purchase?
Most DRA Partnership policies are comprehensive, covering care in various settings, including home care and skilled nursing facilities. Benefits are usually dollar-based.
According to a January 2014 report, here’s a breakdown 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%
A California Long-Term Care Partnership report (April-June 2013) provides data on 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 per day: 11% (aggregate figure)
If you’re considering long-term care insurance and want to explore Partnership options in states with long term care partnership programs, it’s recommended to start the qualification process. Click here to complete our simple online questionnaire and connect with a specialist in your area. There’s no obligation, and you can receive free information to help you make informed decisions about your long-term care planning.
