Planning for long-term care is a critical part of financial preparedness for retirement and beyond. The escalating costs of care, whether in-home assistance, assisted living, or skilled nursing facilities, can quickly deplete savings and impact your family’s financial future. For many middle-income Americans, the Long Term Care Partnership Program offers a valuable strategy to protect assets while preparing for potential long-term care needs. This program uniquely blends private long-term care insurance with Medicaid asset protection, providing peace of mind and financial security. But What States Have Long Term Care Partnership Programs available? Let’s delve into the details.
Understanding Long-Term Care Partnership Programs
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, established under the Deficit Reduction Act of 2006, is asset protection.
Here’s how it works: when you purchase a Partnership-qualified long-term care insurance policy, you gain “dollar-for-dollar” asset disregard protection if you ever need to apply for Medicaid to cover long-term care expenses. For every dollar your Partnership policy pays out in benefits, you can protect an equivalent amount of your assets and still qualify for Medicaid. This is often referred to as “Medicaid spend down” protection.
Let’s illustrate with an example: Imagine Sarah purchases a Partnership-qualified policy, and years later, requires long-term care. Her policy pays out $200,000 in benefits for her care. Thanks to the Partnership program, Sarah can shield an additional $200,000 of her assets beyond the standard Medicaid asset limits. This means she can access Medicaid to help cover ongoing care costs without completely depleting her life savings. Furthermore, in many states, this asset protection extends to estate recovery, safeguarding assets for your heirs after your passing.
Which States Offer Long-Term Care Partnership Programs?
The Long Term Care Partnership Program began as a pilot project in the late 1980s, initially involving California, Connecticut, Indiana, and New York. While these original four states pioneered the concept, the Deficit Reduction Act of 2006 broadened the availability of these programs nationwide.
Today, a vast majority of states have implemented Long Term Care Partnership Programs. The following table, based on information updated as of March 2014 and current program availability, outlines the status of Partnership programs across different states. Please note that program details and availability can change, and it’s always recommended to verify the most current information with your state’s Department of Health and Human Services or a qualified long-term care insurance specialist.
| 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 |
Important Considerations Regarding State Programs:
- Effective Date: This refers to the date when the U.S. Department of Health & Human Services approved the State Plan Amendment, making Partnership policies available in that state.
- Reciprocity: Most states with DRA Partnership programs, along with New York, Indiana, and Connecticut, offer reciprocity. This means they will typically honor Partnership-qualified policies purchased in other DRA Partnership states when determining Medicaid eligibility and asset disregard. California is a notable exception and does not offer reciprocity. Always confirm reciprocity rules when planning for potential relocation in the future.
Understanding the Costs of Partnership Long-Term Care Insurance
The cost of Long-Term Care Partnership insurance policies varies based on several factors, including your age, health, the level of coverage you choose, and policy options like inflation protection.
Data from a 2012 New York State Long-Term Care Partnership report provides some insights into potential premium ranges:
- Ages 50-54: Annual premiums ranged from approximately $1,384 to $11,667.
- Ages 55-59: Annual premiums ranged from approximately $1,756 to $12,864.
- Ages 60-64: Annual premiums ranged from approximately $1,863 to $9,490.
- Ages 65-69: Annual premiums ranged from approximately $3,321 to $10,002.
It’s crucial to understand that these ranges are broad and reflect the diverse policy benefits individuals select, as well as their health status at the time of application. Moreover, the long-term care insurance market is dynamic. A 2014 Long-Term Care Insurance Price Index highlighted significant price variations (between 40% and 100%) for similar coverage across different insurers. This underscores the importance of comparison shopping and working with an experienced long-term care insurance specialist to find the best policy and value for your individual needs.
Key Features and Frequently Asked Questions about Partnership Policies
Partnership-qualified long-term care insurance policies typically share several key features and address common questions:
Policy Types: Almost all DRA Partnership policies are “comprehensive,” covering a range of long-term care services in various settings, including your home, assisted living facilities, and skilled nursing facilities. Benefits are usually defined in dollar amounts.
Inflation Protection (COLA): To maintain the real value of your benefits over time, especially with rising healthcare costs, inflation protection is a significant consideration. Most states require some form of inflation protection for Partnership policies, particularly for younger applicants. Requirements can vary:
- Age-Based Rules: Many states have different COLA requirements based on age at the time of purchase. For instance, some may require compound inflation protection (like 5%) for those under a certain age (e.g., 61 or 75), while offering more flexibility for older applicants.
- Original Partnership States (California, Connecticut, Indiana, New York): These states often have specific and sometimes stricter inflation protection rules. For example, California might require 5% compound inflation to age 70, while Connecticut may mandate 5% compound at all ages.
Reciprocity in Detail: While most DRA Partnership states offer reciprocity, allowing you to maintain asset protection benefits if you move to another participating state, it’s essential to understand the nuances:
- General Rule: Generally, yes, Partnership policies are portable between states with reciprocity.
- Exceptions: The original four Partnership states, particularly California, can be exceptions to reciprocity rules. California does not offer reciprocity. Connecticut and Indiana may offer reciprocity if your new state also has reciprocity. New York generally offers dollar-for-dollar reciprocity. Always verify the specific reciprocity rules of both your current and potential future states of residence.
Frequently Asked Questions:
Q: If I buy a Partnership policy in one state, will it still qualify if I move to another state?
A: Generally, yes, if both states have reciprocity agreements (common among DRA Partnership states). However, always confirm the specific rules, especially if moving to or from California or one of the original four Partnership states.
Q: Do most states require Partnership policies to include 5% compound inflation protection?
A: No, requirements vary by state and often by age. Many states allow different types of inflation protection, such as 3% compound, simple inflation, or guaranteed purchase options, especially for older applicants. Original Partnership states often have more specific mandates.
Q: Do I need to specifically ask for a Partnership-eligible policy?
A: Yes, it’s crucial to ensure the policy you purchase is explicitly designated as Partnership-qualified. While many policies may meet the underlying requirements, not all insurance carriers file their policies as Partnership policies in every state. Upon policy delivery, you should receive documentation confirming its Partnership qualification.
How Much Long-Term Care Partnership Insurance Do People Buy?
Most Partnership policyholders opt for comprehensive coverage that includes care in various settings. Benefit levels vary, but data suggests some common trends:
- Maximum Policy Benefit: A significant portion of Partnership policies (around 54% based on one report) have a maximum policy benefit of $182,600 or higher. A notable percentage (14%) even choose unlimited maximum benefits.
- Daily Benefit Amounts: In California, for example, a significant percentage of policies (around 31%) have a daily benefit around $200 per day. Many policies offer daily benefits in the range of $170 to $250 or higher, depending on individual needs and cost considerations.
These figures provide a general idea of coverage levels, but individual needs and financial situations will dictate the most appropriate policy benefits.
If you’re considering long-term care insurance and want to explore Partnership program options in your state, it’s recommended to connect with a qualified long-term care insurance specialist. They can provide personalized guidance, explain state-specific program details, and help you compare Partnership-qualified policies to find the best solution for your long-term care planning needs.
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