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Part 2: Do We Need Long Term Care Insurance

By Edited May 7, 2016 0 0

Partnership Plans for Long Term Care

A great way to protect your estate

Long Term Care Partnership programs have been around since the early 90s and 43 states now participate in offering partnership programs.  In 2006 the Deficit Reduction Act (DRA)[1] was passed which authorized states to offer special Medicaid asset disregards for those that purchase a private long term care insurance plan.  These are known as Partnership policies.

Remember from part one that Medicaid will make you spend down your assets until there is no more than $2,000 left in your bank account before you qualify for Medicaid paying for your long term care stay. 

With a partnership plan you will get a “dollar for dollar” asset disregard or “spend down” protection.  So for every dollar of benefit in your plan you will get a dollar of Medicaid asset disregard paid on your behalf.  Leaving you with a larger estate upon your passing. 

What does this mean?

Smily Nurse

If you have a plan that offers a benefit of $300 a day, or $9,000 a month, for 3 years.  The total benefit is $324,000 that will be used for your long term care.  If you are 61 or under to qualify you will need a minimum of  3% inflation rider.  If you’re between the ages of 62- 75 you only need a cost of living increase rider or (COLA).  People over the age of 75 do not need any rider for inflation or COLA.

So you have this long term care plan and you enter the doors of a nursing home.  Three years go by and you have exhausted your $324,000 benefit in the plan.  Now you have to start spending your money down before Medicaid will pay for your long term care.  Since you have a long term care partnership insurance plan you have now exempt $324,000 from being spent down.  You get to keep your $2,000 and the $324,000 worth of your assets, in essence, saving a significant amount of your estate that could be left to a spouse or children.

Getting a partnership long term care plan does not cost you any extra.  All you have to do is check with your agent to see if the plan you are looking at is a partnership plan.  Most states do not give you the partnership automatically so make sure to ask.  Getting this type of plan will help to protect your estate without worrying about the additional costs that most people fear when buying long term care insurance.

fun lady
Most states offer partnership for long term care plans.  Since there are 43 states that offer them it would be easier to list the states that don't.  The states that don't offer a partnership plan are: Alaska, District of Columbia, Hawaii, Michigan, Mississippi, New Mexico, Utah, and Vermont[1]

Another thing to consider is that most states with a long term care partnership plan offer reciprocity with each other.  California is the only state that offers no reciprocity but you need to check with your plan to see if the state you are moving to has specific rules that may apply. 

Partnership long term care insurance plans are a great way to protect your assets but not enough people know or understand how they work or that they are even available.  Check with a professional to see if this type of plan may be right for you because, remember, most people wait until it's too late.  Hope this helps to put this into perspective.[2][3]

Retirement Income: An Owner's Manual
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Long-Term Care: How to Plan & Pay for It
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(price as of May 7, 2016)


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  1. AALTCI Website (No Author Listed) "Long Term Care Partnership Plans: Added Protection Ideally Suited For Middle-Income Americans." American Association for Long Term Care Insurance. 6/11/2014 <Web >
  2. Nick Stovall and Mario Romano Retirement Income: An Owners Manual. Minneapolis, MN: First Printing, 2014.
  3. Phyllis Shelton Protecting Your Family With Long Term Care Insurance. Hendersonville, TN: LTCI Publishing, 2013.

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