How Long Term Care Insurance Partnership Works?

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How Long Term Care Insurance Partnership Works?

Post by ladykiller on Thu Feb 17, 2011 8:04 pm

Many middle-income Americans are torn into pieces when the need for long term care occurs. Everybody knows that long term care falls heavily during ages 50 to 60, and the prices for these facilities can ruin one’s finances. Another caveat is the scant support from government to help middle and low income earners from continuing their care either in a nursing home or in a community. Although Medicaid was established to solve the problem on LTC, many middle-income people are disheartened from applying for Medicaid because of the latter’s onerous qualification standards.

Medicaid favours low-income people, while middle-income people endure the daunting long term care costs or, otherwise, dissipate their assets in exchange for Medicaid coverage. The inception of Deficit Reduction Act of 2005 created a plausible program called the Long Term Care Insurance Partnership. The primary goal of the program is to create collaboration between the state government and private insurance companies to encourage the sale of long term care insurance, while at the same time reduce the weight on Medicaid in paying the country’s most expensive health care.

Qualified partnership policies must meet special state requirements. Although policies may vary from state to state, most partnership policies should have comprehensive benefits that range from institutional to home care services, must be tax-qualified, provide consumer protection, and incorporate inflation protection. The only discrepancy of partnership policies in some states is the amount of inflation protection. All partnership policies must be approved by State, and the state should educate and encourage the public to consider this financing option.

Partnership policy addresses the disturbing issue with Medicaid. This holds a special feature called ‘asset disregard” that allows applicants, regardless of income and assets, to keep dollar amount more than Medicaid’s asset limit, to receive benefits for long term care services. The amount of assets than can be kept is commensurate to the amount you may receive for the benefits. Without a partnership policy, you are obliged to spend down your assets until it reach the required asset cut-off.

Since most of these policies shall include inflation protection, the amount of benefits you receive can go higher than the actual amount you purchased. This also allows people to qualify for coverage after they have exhausted their private long term care insurance. On June 1, 2009, there were 29 states that implemented the partnership program, among them are California, Colorado, New York, Texas, Oregon, Maryland, Kentucky, Virginia, Florida, Rhode Island, and etc.

Important Things to Consider


1. Be careful in choosing partnership policies. Make sure the partnership policy is state-approved, and it must include some degree of inflation protection.

2. All policies bought before the Partnership programs’ effective date will not be considered as state-qualified; however, there are some states that allow the swapping of non-qualified policies to state-qualified ones.

3. The eligibility for Medicaid is not automatic. Since the policies differ in every state, you must inquire in your state department for Medicaid eligibility rules as well partnership policy rules.

4. States that participate in the partnership program have ‘reciprocity’ feature that allows policyholders to use their partnership policy from a certain state to another.


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