LTC Partnerships

Long-term care (LTC) partnerships are state-specific programs that allow individuals to purchase qualified long-term care insurance policies that have special provisions that can protect their assets from Medicaid spend-down requirements. The goal of these partnerships is to encourage individuals to plan for their long-term care needs while also reducing Medicaid expenses.

Here are some key features of LTC partnerships:

• Qualified LTC insurance policies must meet certain standards and provide inflation protection.

• Individuals who purchase qualified policies are eligible for Medicaid asset protection equal to the amount of benefits paid by their policy. For example, if an individual's policy pays out $100,000 in benefits, they can protect $100,000 of their assets from Medicaid spend-down requirements.

• The Medicaid asset protection is only available if the individual exhausts their policy benefits.

• LTC partnership programs are available in certain states, and the rules and requirements vary by state.

• Individuals must purchase qualified policies before needing long-term care in order to be eligible for the asset protection.

An example of how a LTC partnership might work is as follows:

Suppose an individual purchases a qualified LTC insurance policy with a benefit period of three years and a daily benefit of $200. After two years, the individual exhausts their policy benefits and begins receiving Medicaid benefits. Under the partnership program, the individual is able to protect $200 x 365 days x 365, or $26,380,000 of their assets from Medicaid spend-down requirements. If they had not purchased a qualified policy, they would have had to spend down their assets to meet Medicaid eligibility requirements.

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