Protect Assets & Receive Medicaid with Long-Term Care Partnership Programs

Summary
Long-Term Care Partnership Programs are collaborations between private insurance companies and state-run Medicaid. These partnerships allow seniors to keep financial assets beyond the normal limits and still qualify for Medicaid. They also protect those assets from Medicaid Estate Recovery. Plus, these programs enhance long-term care coverage in nursing homes, in beneficiary’s homes and in other locations, just like all long-term care insurance does for Medicaid recipients.

What Are Long-Term Care Partnership Programs?

Long-Term Care Partnership Programs are cooperative agreements between private insurance companies and Medicaid, which is funded by the federal government and operated by state governments. The unique benefit offered by these programs is the protection of assets. Long-Term Care Partnership Programs protect assets in two ways:

1. Medicaid Long Term Care applicants who also have long-term care insurance that is part of a Partnership Program are allowed to keep assets beyond the normal limits and still qualify for Medicaid, eliminating the need to spend down almost all of their assets in order to be eligible.
2. The assets are also protected after from Medicaid Estate Recovery, which normally tries to collect reimbursement for long-term care through the estate of deceased Medicaid beneficiaries.

These “asset disregards” are meant to be an incentive for people to purchase private long-term care insurance instead of going on publicly-funded Medicaid as soon as possible. In other words, someone who might use Medicaid to finance long term care costs, like moving into a nursing home, could instead be motivated to purchase private insurance to cover those costs because the partnership program will allow them keep more of their assets for themselves and as a family inheritance.

How Do Long-Term Care Partnership Programs Work?

Long-Term Care Partnership Programs work in several ways. First, they allow seniors to keep assets beyond the normal asset limit and still qualify for Medicaid Long Term Care. They are allowed to keep assets (including their home) with a total value that equals the amount their long-term care insurance paid out. The following example might help you understand the concept:

Albert lives in Florida and purchases a long-term care policy from an insurance company that’s part of the Partnership Program. He pays his premiums and when he needs long-term care, the insurance policy kicks in and will cover $400,000 in long-term care expenses. After the policy has paid out the $400,000 in coverage, Albert can apply for Medicaid to cover his long-term care expenses. Florida usually has a $2,000 asset limit to qualify for Medicaid, but because Albert bought his long-term care insurance from a company that was part of the Partnership Program, his asset limit is $402,000.

If Albert’s long-term care insurance was not part of the partnership program, he would have had to spend that $400,000 (most likely on his long-term care costs) before he was eligible for Medicaid. Needing to spend all of your assets to qualify for Medicaid is a real concern for most seniors.

Not only can Albert keep the extra $400,000 while he’s alive, whatever is left of it will also be protected as a family inheritance after his death. That’s because, as mentioned above, these long-term care partnership programs protect assets from Medicaid Estate Recovery. States are required by law to try and collect reimbursement for long-term care after the death of Medicaid beneficiaries, but the assets protected by the Partnership Program can not be used for estate recovery.

In addition to the asset disregards, these Partnership Programs also work with Medicaid to enhance the overall coverage, just like all long-term care insurance. We’ll use another example to illustrate this concept:

Wanda has a long-term care insurance policy that covers up to $150 per day. Her actual long-term care expenses are $250 per day, leaving her with $100 per day deficit. But Wanda also has Medicaid, so Medicaid will pay for the $100 per day deficit and Wanda’s long-term care will be totally covered.

When to Purchase a Partnership Program Policy

Someone who wishes to participate in a Long-Term Care Partnership Program would need to buy private long-term care insurance when they are still relatively healthy. This means the Long-Term Care Partnership Program is best for someone who thinks they may need long-term care benefits sometime in the future, but is not experiencing symptoms already. This is because most insurance companies screen for wellness and health conditions before approving someone’s insurance plan. For someone who has been diagnosed with Alzheimer’s disease, for example, or has moved into a nursing home, it is too late to purchase private long term care insurance and participate in the Partnership Program.

Requirements for a Long-Term Care Partnership Program

• The insurance company and policy must be approved by the state where the recipient lives. If the policy is not part of the state’s Partnership Program, there is no protection for assets.
• The long-term care insurance policy needs to be bought while still in relatively good health in order to be approved.
• The policy must be tax-qualified, meaning some of its cost is tax-deductible.
• The policy must be inflation-protected, meaning the potential benefits paid out increase as the cost of long term care increases. (The exception to this rule is that seniors older than 75 do not need inflation protection.)
• To receive the benefits of asset protection and increasing one’s asset limit, an individual must be approved for Medicaid Long Term Care (Nursing Home Medicaid, HCBS Waivers or ABD Medicaid) in the state where the partnership policy was purchased, or in a state that has an agreement with the state where the senior wants to receive Medicaid Long Term Care benefits. This option, available between some states but not others, is often called a “reciprocal agreement.”

Which States Have Long Term Care Partnerships Programs?

As of 2023, every state except Hawaii, Alaska, Utah and Mississippi, as well as Washington, D.C., have a version of the Long-Term Care Partnership Program. And Alaska and Mississippi have both taken steps toward establishing Partnership Programs. Anyone interested is encouraged to confirm that their state of residence has a Partnership Program by contacting their state’s Department of Insurance via this link.

Partnerships and the 3 Types of Medicaid Long Term Care

There are three types of Medicaid Long Term Care relevant to seniors – Nursing Home Medicaid, Home and Community Bases Services Waivers and Aged, Blind and Disabled Medicaid. Long-Term Care Partnership Programs can work in conjunction with all three types.

Nursing Home Medicaid covers all the costs associated with nursing homes, including room and board. HCBS Waivers and ABD Medicaid will provide long-term care benefits to seniors who are still living at home, with a loved one or somewhere else in the community, like an assisted living facility. However, the types of benefits and places where they can provided in the community can vary by state, HCBS Waiver and ABD Medicaid program.

All three of these programs have two financial requirements – an asset limit an income limit. While Long-Term Care Partnership Programs can increase the asset limit for seniors, it does not impact the income limit.

How to Find a Partnership Policy

A good way to find long term care insurance that partners with state Medicaid programs is to contact the nearest state Department of Insurance (contacts at this link). One can also call their nearest Medicaid office and ask about long term care partnership programs.