Planning for long-term care is a critical part of financial security, especially as healthcare costs continue to rise. For many middle-income Americans, the Long Term Care Partnership Program offers a unique solution, blending private long-term care insurance with Medicaid asset protection. Understanding Which States Have Long Term Care Partnership Programs and how these programs work can be invaluable in safeguarding your future and your assets.
This article delves into the details of Long Term Care Partnership Programs, explaining their benefits, how they function, and most importantly, identifying the states that currently offer these programs. We aim to provide a comprehensive guide to help you determine if a Partnership Program is right for you and how to navigate your options.
Understanding Long-Term Care Partnership Programs
The Long Term Care Partnership Program emerged from a need to encourage individuals to plan for their future long-term care needs while also addressing concerns about asset protection should they eventually require Medicaid assistance. The foundation for these programs was laid with the Deficit Reduction Act (DRA) of 2006, which enabled states to establish these partnerships.
At its core, a Long Term Care Partnership Program is a collaboration between state governments and private insurance companies. It’s designed to promote the purchase of private, Partnership-qualified (PQ) long-term care insurance policies. The primary incentive for purchasing a PQ policy is asset disregard protection.
The Benefit of Asset Disregard: Dollar-for-Dollar Protection
Imagine you purchase a Partnership-qualified long-term care insurance policy. If you need long-term care in the future and your policy pays out benefits, you earn a corresponding amount of asset protection. This is known as “dollar-for-dollar” asset disregard.
For every dollar your PQ policy pays out in claim benefits, you are allowed to protect one dollar of your assets should you ever need to apply for Medicaid. This protected amount is disregarded when Medicaid calculates your eligibility, meaning you can retain more of your wealth while still accessing essential Medicaid benefits for long-term care.
Let’s illustrate with an example: Suppose Mrs. Johnson purchases a PQ policy and years later requires long-term care. Her policy pays out $200,000 in benefits. Thanks to the Partnership Program, Mrs. Johnson can now protect an additional $200,000 in assets beyond the standard Medicaid asset limits. This allows her to qualify for Medicaid while preserving a significant portion of her savings and estate. Furthermore, these protected assets are also shielded from Medicaid estate recovery after her passing.
The Origins and Evolution of Partnership Programs
The concept of Long Term Care Partnership Programs isn’t entirely new. It began as a demonstration 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 PQ policies in 1992.
However, the expansion of Partnership Programs faced a hurdle with the 1993 Omnibus Budget Reconciliation Act (OBRA ’93), which restricted new states from joining unless their Medicaid State Plan Amendment (SPA) was approved before May 14, 1993.
The landscape changed significantly with the Deficit Reduction Act of 2006. The DRA provided a renewed pathway for states to implement Partnership Programs. Since then, many states have adopted the necessary legislation to offer these programs to their residents.
It’s important to note that Long Term Care Partnership Programs are not uniform across all states. While programs in states that adopted them post-DRA tend to be more consistent, variations still exist. States have some flexibility in designing their programs, leading to differences in specific requirements and policy features.
Which States Currently Offer Long Term Care Partnership Programs?
As of the last update in March 2014, a significant number of states have approved and implemented Long Term Care Partnership Programs. It is crucial to verify the most current status with your state’s Department of Health and Human Services or a qualified long-term care insurance specialist, as program statuses can evolve.
Here’s a table outlining the states with approved Partnership Programs at that time, including their effective dates and reciprocity status:
| 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 Points from the Table:
- Effective Date: This is the date when the U.S. Department of Health & Human Services approved the State Plan Amendment, officially launching the Partnership Program in that state. “Original Partnership” denotes the initial four states.
- Policy Reciprocity: Reciprocity refers to whether a state will recognize Partnership-qualified 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, offer reciprocity. California is a notable exception. Reciprocity is crucial for individuals who may move to a different state in the future.
It’s vital to confirm the most up-to-date information regarding program availability and reciprocity, as state regulations can change.
Understanding the Costs of Partnership Insurance
The cost of Long Term Care Partnership insurance is influenced by a variety of factors, including your age, health, the level of coverage you choose, and the specific policy benefits. Data from a 2012 New York State Long-Term Care Partnership report provides insights into the potential cost ranges:
- 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 reflect the diversity in policy benefits selected by individuals and their health status at the time of application. It’s also important to note that pricing for virtually identical coverage can vary significantly between insurance companies. The 2014 Long-Term Care Insurance Price Index indicated price differences of 40% to 100% for similar coverage. This underscores the importance of comparison shopping when considering Partnership insurance.
Frequently Asked Questions about Partnership Policies
To further clarify common concerns, let’s address some frequently asked questions about Long Term Care Partnership Programs:
Q: If I buy a Partnership-eligible policy in one state, will it still qualify if I move to another state?
A: Generally, yes, especially if both states are DRA Partnership states and offer reciprocity. However, California, one of the original four Partnership states, does not offer reciprocity. It’s crucial to verify the reciprocity agreements between specific states.
Q: Do most states with Partnership policies have reciprocity?
A: Yes, most do. Exceptions primarily involve the original four Partnership states, particularly California. Connecticut and Indiana offer reciprocity if the new state also does. New York offers dollar-for-dollar reciprocity. Always confirm the specific reciprocity rules.
Q: Do Partnership policies require 5% compound inflation protection, or are other options allowed?
A: Inflation protection requirements vary by state. Most states allow different compound Cost of Living Adjustments (COLA) depending on age. For instance, for those under 61, any compound COLA may be acceptable. For ages 62-75, any automatic COLA might qualify. After age 75, often no COLA is mandated for Partnership qualification. Guaranteed Purchase Options (GPO) usually do not qualify a policy for partnership status in most states.
The original four states have specific rules. For example, California requires 5% compound inflation to age 70, then allows 5% simple. Connecticut mandates 5% compound at all ages. Indiana requires 5% compound for full asset protection but offers options like 5% simple or CPI for dollar-for-dollar protection. New York allows 3% or 5% compound for those 79 and younger.
Q: Do I need to specifically ask for a Partnership-eligible policy?
A: It depends on the state. In the original four Partnership states, separate policy forms were often required. In many other states, if a policy has been filed as a Partnership policy and includes the necessary COLA rider, it automatically qualifies. Policyholders typically receive a letter confirming their policy’s Partnership qualification upon delivery. Not all insurance carriers offer Partnership-qualified policies in every state, so it’s essential to confirm with your insurance specialist.
Typical Coverage Amounts Purchased Under Partnership Programs
Most Partnership policies are comprehensive, covering care in various settings, including home care, assisted living, and skilled nursing facilities. Benefits are usually defined in dollar amounts. A 2014 report indicated the following trends in maximum policy benefits purchased under DRA Partnership programs:
- Less than $109,599: 10% of policies
- $109,600 – $146,099: 8% of policies
- $146,100 – $182,599: 12% of policies
- $182,600 and above: 54% of policies
- Unlimited: 14% of policies
Data from a California Long-Term Care Partnership report (April-June 2013) highlighted daily benefit amounts:
- Average Daily Benefit (across all policies): Approximately $170 – $250+ per day, with a significant portion (over 11%) exceeding $200 per day.
These figures suggest that Partnership policy buyers often opt for substantial coverage amounts, reflecting a desire for robust protection against long-term care expenses.
Is a Long-Term Care Partnership Program Right for You?
Long Term Care Partnership Programs offer a valuable tool for individuals seeking to balance private long-term care insurance with Medicaid asset protection. They can be particularly beneficial for middle-income individuals who want to safeguard their assets while preparing for potential long-term care costs.
To determine if a Partnership Program aligns with your needs, consider:
- Your financial situation: Assess your assets and income to understand how asset protection benefits might impact your overall financial plan.
- Your risk tolerance: Evaluate your comfort level with potential long-term care expenses and the desire to mitigate those risks.
- Your state of residence: Confirm if your state offers a Partnership Program and understand its specific features and reciprocity agreements.
Consulting with a qualified long-term care insurance specialist is highly recommended. They can provide personalized guidance, help you navigate the complexities of Partnership programs, and assist you in finding a policy that meets your specific needs and circumstances.
