Partnership Qualified Long Term Care Insurance Policies

Partnership Qualified Long Term Care Insurance Policies


Some insurance companies offer Partnership Qualified long term care insurance policies. Following is an explanation of what those policies entail and what advantages they may provide, as well as background on the New York State Partnership for Long Term Care.
 
The Problem – Limited Benefits and Limited Medicaid
Most long term care (LTC) insurance policies provide a limited amount of benefits. Even lifetime benefit policies generally have a daily, monthly or annual limit. The cost of long term care after a policy has been exhausted can be financially devastating. To compound the problem, assistance in the form of Medicaid is generally limited to the impoverished.
 
The Solution – Partnership Qualified Long Term Care Insurance Policies
The Partnership Program is based on the Robert Wood Johnson Foundation program called the Program to Promote Long Term Care Insurance for the Elderly, initiated in 1987. Today, a Partnership Program is a “partnership” between a state, an insurance company and state residents who buy long term care Partnership policies. With a Partnership Qualified policy, an individual can apply for Medicaid with ‘asset disregard’. This allows the applicant to keep assets that would otherwise be disallowed. In almost all states that have Partnership Programs, the amount of assets Medicaid will disregard is equal to the amount of the benefits actually received under an LTC Partnership Qualified policy. This type of disregard is often referred to as Dollar for Dollar.
 
For example, a New Jersey resident who purchases $306,600 (the average rate of a private nursing room for an average three year stay in NJ in 2008) worth of insurance through a Partnership Qualified policy. When the care is needed, the policy actually pays for $900,000 of care (due to inflation protection). Under the state’s Partnership Program, the policy holder would then have $900,000 of assets protected from NJ Medicaid. 
 
The New York State Partnership for Long Term Care
Only two states in the entire U.S. can offer both Dollar for Dollar and Total Asset Partnership Programs – Indiana and New York. As its name implies, Total Asset offers unlimited asset protection from Medicaid – far more powerful than Dollar for Dollar. 
 
Take, for example, a New York resident who purchases a New York State Partnership for Long Term Care Qualified policy. After he exhausts his policy, he can apply for New York State Medicaid Extended Coverage – which allows him to protect some or all of his assets, depending on whether he selects a Dollar for Dollar Asset Protection plan or a Total Asset Protection plan. However, his income is considered in determining his eligibility for Medicaid Extended Coverage. The plans are as follows:
 
Plan Name                Min Policy Duration                                                   Max Policy Duration       Min Daily Benefit (2009)       Max Elimination
Total Asset 50            3 Yrs Nursing Home (NH) or 6 Yrs Home Care (HC)* Unlimited                          NH=$218, HC=$109                      100 Days
3/6/50
Total Asset 100          4 Yrs NH or 4 Yrs HC or 4 Yrs Residential Facility      Unlimited                          NH=$218, HC=$218                      100 Days
4/4/100                       
Dollar for Dollar 50    1.5 Yrs NH or 3 Yrs HC*                                               2.5 Yrs NH or 5 Yrs HC     NH=$218, HC=$109                       60 Days
1.5/3/50
Dollar for Dollar 100 2 Yrs NH or 2 Yrs HC or 2 Yrs Residential Facility      2.5 Yrs NH or 2.5 Yrs HC NH=$218, HC=$218                       60 Days
2/2/100                                                                                                                2.5 Yrs Residential Facility
*Home care days are counted on the basis of 2 home care days equaling 1 nursing home day.
 
 
Aaron Skloff, Accredited Investment Fiduciary (AIF), Chartered Financial Analyst (CFA), Master of Business Administration (MBA), is the Chief Executive Officer of Skloff Financial Group, a NJ based Registered Investment Advisory firm. The firm specializes in financial planning and investment management services for high net worth individuals and benefits for small to middle sized companies. He can be contacted at www.skloff.com or 908-464-3060.