Introduced in 1987, the Long-Term Care Partnership Program aims to reduce the dependency upon state funded Medicaid assistance of individuals looking to finance the costs of long term care.
Under the program, consumers who purchase private long term care insurance (LTCI) policies rely first on benefits from those policies before turning to Medicaid for relief. Subsequently, individuals are able to protect some or all of their assets from Medicaid spend-down requirements.
Currently, only four states offer partnership programs. California and Connecticut provide a dollar-for-dollar system, wherein the dollar amount of protected assets is equivalent to the dollar value of the benefits paid by the long term care insurance policy. New York offers total asset protection with the purchase of a comprehensive long term care insurance policy, while Indiana offers a combination of the two: Purchasers receive dollar-for-dollar protection up to a certain benefit level and total asset protection for all policies above that level.
Why only four states?
The Omnibus Budget Reconciliation Act of 1993 (OBRA) contained language that directly impacted the expansion of long term care partnerships to other states. Only the four initial states were recognized, with the exception of two future programs in Iowa and Massachusetts. These six states were allowed to go ahead with their planned partnerships because they had received approval before OBRA 1993 went into effect. The remaining states were not permitted to pursue partnership programs.
On the horizon
New legislation signed by President Bush in the spring of 2006 allows all 50 states to establish partnership programs. The bill increased incentives for seniors buying LTCI and hindered attempts to spend down assets before seeking Medicaid assistance.
Pamela Sapio is managing editor of Insurance Marketing magazine, Agent's Sales Journal's sister publication, and a frequent contributor to the Agent's Sales Journal.
