Planning for your future is essential, especially when considering long-term care. It’s a reality that over 70% of individuals aged 65 and above will require some form of long-term care services during their lifetime. Contrary to common misconceptions, Medicare and standard health insurance policies generally do not cover these crucial long-term care expenses. The responsibility of funding long-term care largely falls on individuals and families. This is where the Maryland Long-Term Care Partnership Program becomes incredibly important.
Established following the Deficit Reduction Act of 2005, the federal government emphasized individual responsibility in long-term care funding, making Medicaid eligibility for long-term care more stringent and simultaneously expanding Partnership Programs. These programs are unique collaborations between state governments, private long-term care insurance companies, and residents. The Maryland Long-Term Care Insurance Partnership program is specifically designed to make purchasing long-term care insurance more impactful by connecting these specialized Partnership-qualified policies with Medicaid benefits for those with extended care needs.
Partnership-qualified policies adhere to specific criteria that can vary across states. Generally, these policies offer comprehensive coverage for both institutional and home-based services, are tax-qualified, include consumer protection measures, and provide state-specific inflation protection provisions. Often, the primary distinction between a Partnership-qualified policy and a standard long-term care insurance policy lies in the state-mandated inflation protection features.
It’s important to note that the Maryland state government doesn’t have a separate Partnership office. The program is integrated into the state’s Medicaid laws, with the Department of Insurance overseeing the policies. If you’re unsure whether your current policy is Partnership-qualified, further investigation is recommended.
Income and Asset Protection with Maryland Partnership Policies
A key advantage of a Maryland Partnership for Long-Term Care qualified policy is the ‘asset disregard’ feature when applying for Medicaid. This provision allows policyholders to protect a significant amount of assets that would typically be considered when determining Medicaid eligibility. Specifically, for every dollar paid out in benefits by your Partnership-qualified long-term care insurance policy, one dollar of your assets is disregarded by Medicaid.
Given that these policies include inflation protection, the total benefits received can exceed the initial policy value, further enhancing asset protection. For example, if a Partnership policy pays out $300,000 in benefits, the policyholder can retain an additional $300,000 in assets beyond Maryland’s standard Medicaid asset limit, which is typically $2,000 for an individual in most states. Married couples generally have more generous asset thresholds.
Historically, trusts were used for asset protection, but current regulations, particularly the 60-month “look-back” period for irrevocable trusts, have made this strategy less straightforward. Assets must be transferred into an irrevocable trust at least 60 months before applying for Medicaid to be exempt. Partnership policies offer a more direct and reliable asset protection method in the context of long-term care needs.
Furthermore, a Partnership policy provides estate recovery protection. Without such a policy, Maryland, like many states, may seek to recover Medicaid costs from your estate after your passing. Some states even have filial responsibility laws that could require adult children to contribute to their parents’ Medicaid expenses. A Partnership policy helps mitigate these potential financial burdens on your estate and family.
Example of How a Maryland Partnership Policy Works
Consider John, who purchases a Maryland Partnership for Long-Term Care policy with an initial value of $300,000. Due to inflation protection, the policy’s lifetime maximum benefit grows to $400,000 over time. Years later, John exhausts his policy benefits and requires ongoing long-term care, leading him to apply for Medicaid.
Without a Partnership-qualified policy, John would be limited to just $2,000 in countable assets to qualify for Medicaid, potentially needing to spend down his savings significantly. However, because John invested in a Partnership policy, he can protect $402,000 in assets ($400,000 from the policy benefits plus the standard $2,000 Medicaid asset limit) and still qualify for Medicaid to cover his additional long-term care costs.
Addressing the Unfunded Liability of Long-Term Care
Long-term care represents a substantial unfunded liability for both families and government entities today. Government initiatives increasingly emphasize the role of private insurance in financing long-term care. However, a significant portion of the aging population, including many Baby Boomers approaching retirement, have not adequately planned for these potential expenses.
Moreover, retirees who once believed they could self-fund long-term care are now facing economic challenges and asset erosion, making self-insurance a less viable option. Maryland Partnership for Long-Term Care qualified policies offer a strategic solution to preserve independence, maintain quality of life, and safeguard assets against the high costs of long-term care. These policies provide the same range of benefits and options as non-partnership policies at comparable costs.
Key Benefits of Maryland Partnership for Long-Term Care Policies:
- Daily or monthly benefit options
- Choice of elimination period or deductible
- Comprehensive coverage for home care, adult day care, and facility care
- Benefit period choices (pool of money)
- Potential discounts
Inflation protection is a defining feature of Partnership policies. It ensures that your benefits keep pace with the rising costs of long-term care. Mandatory inflation protection requirements for Partnership policies in Maryland are age-dependent:
- Age 60 and younger: Automatic compound inflation protection
- Ages 61–75: Any form of inflation protection (compound or simple)
- Age 76 and older: Inflation protection is optional
It’s crucial to understand that Guaranteed Purchase Options (GPO) or Future Purchase Options (FPO) for inflation protection typically do not meet Partnership requirements unless you are age 76 or older, as these are considered optional and not automatic inflation adjustments.
Policy Underwriting and How to Get Started
Medical underwriting is required for Maryland Partnership for Long-Term Care policies, similar to traditional long-term care insurance. Applying at a younger age increases your chances of qualifying at favorable rates and premiums. It’s wise to assess your health eligibility early.
We offer Maryland Partnership for Long-Term Care Insurance Policies from state-approved insurance providers. For detailed Medicaid information, you can visit the official Medicaid website. To receive a personalized quote for a Maryland Partnership for Long-Term Care policy from top insurance companies, please fill out our online quote form.
