Long-Term Care Insurance Partnership Policies

Many middle-income people have too much money to qualify for Medicaid but can’t afford a pricey long-term care insurance policy. In an effort to encourage more people to purchase long-term care insurance, the Deficit Reduction Act of 2005 (DRA) created the Qualified State Long Term Care Partnership program. The program offers special long-term care policies that allow buyers to protect assets and still qualify for Medicaid when the long-term care policy runs out.

The program authorized by the DRA expands to all states the partnership programs that were previously available in only four states: California, Connecticut, Indiana and New York.

The DRA-approved programs work this way: Private companies sell long-term care insurance policies that have been approved by the state and meet certain standards, such as having inflation protection. The program offers incentives for people to purchase long-term care insurance policies that will cover at least some of their long-term care needs. The asset protection offered by most partnership programs is dollar-for-dollar: for every dollar of coverage that your long-term care policy provides, you can keep a dollar in assets that normally would have to be spent down to qualify for Medicaid. So, for example, if you’re single, you would normally be allowed only $2,500 in assets in order to qualify for Medicaid coverage of long-term care. But if you buy a long-term care insurance policy that provides $150,000 in benefits, you would be allowed to retain $152,500 in assets and still qualify for Medicaid.

David Wingate is an elder law attorney practicing in Frederick and Montgomery Couties, Maryland. The elder law practice consists of wills, powers of attorneys, living wills, asset protection and Medicaid.