The original long term care policies that were sold prior to 2005 were not Partnership Certified. This means that for the government Medicaid program to pay for someone’s long-term care expenses, the person would have to be impoverished, i.e. poor.  If they had assets then they would have to spend those assets first and become impoverished before Medicaid would cover them.  But what happens to the spouse of the person with the long-term care expenses?  They are now poor and have to drastically downgrade their previous level of living just because their spouse needs state assistance.

Since the passage of the Deficit Reduction Act in 2005, most states are allowing their residents to keep more of their assets if they own a government approved long-term care policy.  These policies are sold by insurance companies and are called Partnership Certified in the contract. 

These policies are almost identical to the pre-2005 long-term care policies, except they must include consumer protection for inflation.  In these policies, for every dollar that you have of maximum overage in your policy, you are entitled to keep a dollar of your own assets should you ever need to apply for state Medicaid to help pay for your long-term care expenses. This helps prevent you from becoming poor and lowering your standard of living for your family and loved ones.

For example:

Mary’s long-term care partnership certified policy would pay her a maximum of $300,000 of benefits in her lifetime.  Mary enters a long-term care facility and her long-term care policy runs out after paying $300,000 in benefits to the facility.  She and her husband Robert have $400,000 in savings.  Now they are required to spend $100,000 to provide care for her before she can apply for state Medicaid aid to help with her long-term care expenses.  The state disregards the first $300,000 of their assets when determining her eligibility. Because her policy was partnership certified, Robert does not have to become poor and change is level of living to obtain help from the state.  Even when Mary passes away, Robert’s remaining assets are protected from “estate recovery” from the state’s Medicaid program.

Currently only 6 states have no partnership documentation available for insurance companies to provide these LTC policies.  Four more have pending state applications and the rest of the states in the nation have partnership certified policies for sale by carriers licensed in each state.  Your Retirement Solutions Specialist can educate you on how these plans can benefit your specific situation.

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