How do the state long-term-care partnership programs work?
State long-term-care partnership programs are a great way to provide extra protection against the high cost of long-term care.
Thirty-four states have enacted partnership laws, and several more plan to do so soon. If you buy an approved long-term-care insurance policy in one of these states and use all of your benefits, you can qualify for Medicaid without having to deplete almost all of your assets first.
State partnership programs allow you to protect assets equal to the amount that your long-term-care insurance policy will pay out, usually your daily benefit multiplied by your benefit period. For example, if you have a policy that pays a total of $200,000 in benefits, you can protect an extra $200,000 in assets above the Medicaid limits, which vary by state.
For a list of states that offer a long-term-care partnership program or that plan to adopt a program soon, check the map at dehpg.net/ltcpartnership. Then ask your agent or insurer whether your policy qualifies for the program. Most policies sold in the past few years qualify, and many older ones do, too.
If your state has a partnership program, you’re better off selecting a “short and fat” benefit period for your long-term-care policy rather than a “long and lean” policy. For example, if long-term care costs about $200 a day in your area, buy a policy that covers $200 a day for three years rather than $100 a day for six years.
Most people who claim long-term-care benefits do not need them beyond three years. A study by actuarial consulting firm Milliman found that only 8 percent of claimants who had policies with a three-year benefit period exhausted their benefits. Of those who opted for a five-year benefit period, only 1.5 percent used all their benefits.
Plus, if you live in a state with a partnership program, you can get help from Medicaid after just three years. But if you choose the long-and-lean policy with the longer benefit period and the lower daily benefit, you’ll have to wait six years.
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