Long-term care can be a significant financial burden for many Americans. Planning for these potential costs is crucial, and long-term care insurance is one way to mitigate this risk. However, many middle-income individuals worry about spending down their assets to qualify for Medicaid if their long-term care insurance benefits are exhausted. This is where Long-Term Care Partnership Programs come into play, offering a unique solution that blends private insurance with Medicaid asset protection. This guide will explain which states have implemented these programs and how they can benefit you.
Understanding Long-Term Care Partnership Programs
Long-Term Care Partnership Programs are a collaborative effort between state governments and private insurance companies, designed to encourage individuals to purchase private long-term care insurance. These programs were initially conceived in the late 1980s as demonstration projects, with Connecticut, California, Indiana, and New York leading the way. The concept gained federal support with the Deficit Reduction Act (DRA) of 2006, which paved the way for more states to adopt these innovative programs.
The core appeal of a Partnership-qualified long-term care insurance policy lies in its asset protection feature. This protection is often described as “dollar-for-dollar” asset disregard. For every dollar your Partnership policy pays out in long-term care benefits, you can protect a corresponding dollar of your assets if you ever need to apply for Medicaid to cover further long-term care expenses.
Let’s illustrate this with an example. Imagine Sarah purchases a Partnership-qualified policy, and years later, she requires long-term care. Her policy pays out $200,000 in benefits. Thanks to the Partnership program, Sarah can now shield an additional $200,000 of her assets beyond the standard Medicaid asset limits. This protected amount is disregarded when Medicaid determines her eligibility, and these assets are also shielded from Medicaid estate recovery after her death.
Which States Offer Long-Term Care Partnership Programs?
The availability of Long-Term Care Partnership Programs varies by state. Following the DRA of 2006, many states have adopted the necessary legislation to offer these programs to their residents. It’s important to note that while there’s more uniformity among states that implemented programs post-DRA, each state still has some flexibility in program design.
The table below provides the status of Long-Term Care Partnership Programs across different states, based on available information. Please note that the status can change, and it’s always best to verify the most current information with your state’s Medicaid agency 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 | 01/17/2010 | Yes |
| Wisconsin | 01/01/2009 | Yes |
| Wyoming | 06/29/2009 | Yes |
Key for Table:
- Effective Date: The date the State Plan Amendment was approved by the U.S. Department of Health & Human Services. “Original Partnership” denotes one of the initial four states.
- Policy Reciprocity: Indicates 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, have reciprocity. California currently does not.
Understanding the Costs of Partnership Long-Term Care Insurance
The price of Long-Term Care Partnership insurance is influenced by several factors, including your age, health, the policy benefits you select, and the insurance carrier. Data from a New York State Long-Term Care Partnership report (2012) provides a cost range based on age:
- Ages 50-54: Annual premiums ranged from approximately $1,384 to $11,667.
- Ages 55-59: Annual premiums ranged from roughly $1,756 to $12,864.
- Ages 60-64: Annual premiums ranged from about $1,863 to $9,490.
- Ages 65-69: Annual premiums ranged from approximately $3,321 to $10,002.
These ranges highlight the impact of benefit choices and individual health on policy costs. Furthermore, the Long-Term Care Insurance Price Index has shown significant price variations (40-100%) for comparable coverage. This underscores the importance of comparison shopping to find the most suitable and cost-effective Partnership policy.
Common Questions About Long-Term Care Partnership Programs
Question: If I purchase a Partnership-eligible policy in one state and then move to another, will my policy still qualify for Medicaid asset protection?
Answer: Generally, yes. Most states with Partnership programs offer reciprocity, meaning they will honor Partnership policies from other DRA Partnership states. However, it’s crucial to confirm the specific reciprocity rules of both your original state and your new state, especially if you are moving to or from one of the original four Partnership states (California, Connecticut, Indiana, New York), as they sometimes have exceptions.
Question: Do most states mandate specific inflation protection on Partnership policies?
Answer: Not necessarily. While inflation protection is a key feature of Partnership policies, the specific requirements can vary by state. Many states are flexible with the type of inflation protection, particularly for younger applicants. For individuals under 61, any compound inflation option is often acceptable. For those between 62 and 75, any automatic cost-of-living adjustment (COLA) rider may qualify. After age 75, inflation protection might not be mandatory in some states. Guaranteed Purchase Options (GPO) generally do not meet Partnership requirements in most states. Again, the original four Partnership states often have stricter and sometimes different rules regarding inflation protection.
Question: Do I need to specifically request a Partnership-eligible policy, or are most long-term care insurance policies automatically Partnership-qualified?
Answer: It’s essential to specifically ask for a Partnership-eligible policy. While some policies may inherently qualify if they meet the required inflation protection and other criteria, not all long-term care insurance policies are Partnership-qualified. In the original four Partnership states, policies typically require a separate Partnership-specific policy form. In other states, while separate forms might not be mandatory, it’s common for policyholders to receive a letter confirming their policy’s Partnership qualification upon delivery. It’s also important to note that not all insurance carriers offer Partnership-qualified policies in every state.
Typical Coverage Amounts in Partnership Policies
DRA Partnership policies are predominantly comprehensive, covering care in various settings, including home care, assisted living, and nursing homes. Benefits are usually defined in dollar amounts. Data from a 2014 report indicates the distribution 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%
California Partnership data from 2013 reveals the average daily benefit amounts chosen by policyholders:
- $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 of policies
- More than $200 per day (cumulative): 11%
Find Long-Term Care Partnership Insurance Options
Understanding Long-Term Care Partnership Programs is the first step in securing your financial future and planning for potential long-term care needs. To explore Partnership-qualified long-term care insurance options available in your state and determine if you qualify, it’s recommended to connect with a specialist.
Click here to complete a simple online questionnaire and be connected with a long-term care insurance expert in your area for free.
Disclaimer: This information is for general educational purposes and should not be considered financial or legal advice. Consult with a qualified professional for personalized guidance regarding your specific situation.
