Does Your State Have A Long Term Care Insurance Partnership Program?

The long term care partnership program is an initiative that was outlined in the Deficit Reduction Act of 2005. Each state can decide whether or not to enact the program for its residents. It is not mandatory.

The Long Term Care Partnership Program: How It Works

The purpose of the long term care partnership program is to encourage consumers to buy long term care insurance to help relieve the financial pressure on the Medicaid program. Lawmakers realize that Medicaid will be unable to sustain the current financial obligations in the future as more baby boomers retire. This program is intended to help reduce the burden.

If a state does not have a long-term care partnership agreement in effect, a policyholder who exhausts all of his benefits under a long term care insurance policy will then have to pay for care out of personal funds. Medicaid will not offer any assistance until almost all of that policyholder's available funds and assets are depleted.

If a state has enacted a long-term care partnership agreement, the same policyholder who has exhausted all policy benefits will be allowed to keep an amount of funds that equals the total sum of all policy benefits paid out by long-term care insurance. This means that Medicaid can begin paying for his care much sooner. This also means that the policyholder would not be completely wiped out by long-term care costs.

Partnership Programs Are Different In Every State

The long-term care partnership program has been steadily adopted by an increasing number of states and an overwhelming majority has either already put the program into effect or has passed the legislation necessary to do so.

Although the program outline was provided by the federal government, each state may make certain amendments and changes as it sees fit. For that reason, the partnership programs may vary from state to state.

Some issues that may change depending on the state include the following:

• Will the state grandfather older long-term care insurance policies into the program that were purchased before the partnership legislation was enacted?
• What specific inflation protection benefits will the state allow for qualified long-term care insurance policies?
• Will the state allow reciprocity for partnership policies that were sold in other states?

It is difficult to keep up with all of the individual state requirements. Here is a link to a useful Web site that tracks these changes and is an excellent source of information on state long-term care partnership programs.

Until next time…Duane

Duane Lipham is a Certified Long-Term Care (CLTC) consultant. You can get more free information, news and articles regarding long-term care and aging at The Long Term Care Consumer Guide Web site and The Long Term Care Review Blog.

Posted in Applying for LTCI, Financing Long Term Care