Protecting your assets with a government-approved, long-term care partnership policy

In the old days, in order for the government pay for someone’s long-term care expenses, the person would have to spend down their assets to the “poverty level”–about $3,000 in most states.

Since 2005, and the passage of the Deficit Reduction Act, most states are allowing their residents to keep more of their assets if they own a government-approved “Long-Term Care Partnership” policy.

“Long-Term Care Partnership” policies are similar to traditional long-term care insurance policies, except they must include special consumer protection features (especially inflation protection.)

Each dollar that your long-term care partnership policy pays to you in benefits entitles you to keep a dollar of your assets, if you ever need to apply for Medicaid services.

For example:

Bill’s long-term care partnership policy pays him $400,000 of long-term care benefits.  He applies to his state to start to pay for his care.  The state disregards $400,000 of his assets when determining if he can qualify for state-funded care.

In the old days, you’d have to spend your assets down to the state-required minimums.  Now, the state will allow you to keep the minimum amounts PLUS an amount equal to whatever your long-term care partnership policy paid to you in benefits.

Your assets are protected from “Medicaid spend down” and your assets can even be protected from “estate recovery” after you pass away.

Four states have successfully run long-term care partnership programs since the 1990’s:  California, Connecticut, Indiana and New York.

Since 2005, many other states have established long-term care partnership programs including Alabama, Arizona, Arkansas, Colorado, Florida, Georgia, Idaho, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Minnesota, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Virginia, Wisconsin, and Wyoming.

As of September, 2010, Delaware, Illinois, Massachusetts, North Carolina, Vermont, and Washington have passed legislation approving long-term care partnership programs in their states.  Policies are not yet for sale in those states.