State Partnership Plans vs Non-Partnership Policies

Partnership policies look and act the same as any other long-term care policies! However, they provide additional asset protection as a reward for people who have planned in advance for the cost of long-term care.

The first four states to adopt partnership policies were California, Indiana, New York and Connecticut, collectively known as the original partnership states. Today, most states have active partnership plans in place. The federal Deficit Reduction Act of 2005, signed into law by President George W. Bush, gave the states the authority to set up partnership programs to encourage and reward consumers who purchased qualified long-term care insurance by giving them an added layer of asset protection.

These partnership certified plans provide the consumer with additional “dollar-for-dollar asset protection” or what is referred to as “asset disregard”. This means that the exact amount of your resources (assets) equal to the dollar amount of long-term care insurance benefits paid to you or on your behalf under the policy may be disregarded for purposes of determining eligibility for long-term care Medicaid benefits. It also protects your estate from any subsequent recovery by the State for receipt of Medicaid-paid services.

Under most circumstances, if you need Medicaid to pay for long-term care services, you must satisfy the income and asset eligibility levels for Medicaid. For many, this means a spend-down of their assets before Medicaid will allow them to apply. With a partnership policy, the amount of assets that may be disregarded is equal to the amount of long-term care benefit paid out of the policy prior to the time you apply for long-term care Medicaid. As a result, you may be able to receive coverage under Medicaid without first being required to substantially exhaust your personal resources. Furthermore, the amount that may be shielded from estate recovery would be equal to the amount of assets disregarded for purposes of eligibility for long-term care Medicaid benefits.

These plans require certain inflation benefit features, among other things, in order for your state to certify them. For many people, the extra asset protection is a key ingredient to safeguard assets from the high costs of extended long-term care.