Long-Term Care Partnership Policies

One example of good planning is purchasing long-term care insurance. The greatest risk to non-taxable estates (those under $12.9 million) is the cost of long-term care. With long-term care insurance, you can shift that risk to an insurance company.

A partnership policy is a special long-term care insurance policy that protects your estate in case you need Medicaid. Why might you need Medicaid if you have long-term care insurance? Well, most LTC policies have limits on how much they will pay or how long they will pay. If you have a partnership policy and it runs out, then you receive additional protection both when you apply for Medicaid and if an estate recovery claim is filed after you die.

Most people want these policies to cover care needed before a nursing home admission is necessary. Medicaid does a poor job of funding care at home and (with few exceptions) Georgia Medicaid does not pay for any care in assisted living. Having a long-term care policy will help you get care where you want it for as long as the policy is paying benefits.

Partnership policies came into the law after February 8, 2006, the effective date for the Deficit Reduction Act of 2005. Under Georgia’s rule, an LTC policy is considered a partnership policy if the following requirements:

• Be issued to an individual on or after January 1, 2007;
• Cover an individual who was a State of Georgia resident when coverage first becomes effective under the policy;
• Meet stringent consumer protection standards;
• Contain a disclosure statement indicating that it meets the requirements under § 7702B(b) of the Internal Revenue Service Code of 1986; and
• Provide the following inflation protections:
  • if the individual was under 61 years of age when policy was issued, must provide annual compound inflation protection;
  • if the individual was age 61 to 76 when the policy was issued, must provide some level of inflation protection; and
  • if age 76 or older, inflation protection may be offered but is not required

The Georgia Partnership page states “For every dollar that a Partnership policy pays out in benefits, a dollar of assets can be protected (disregarded) from the long-term care Medicaid asset limit.” However, the underlying statute, 42 U.S.C. § 1396p(b)(1)(C) indicates that Medicaid should be more generous since it provides for protection when an individual receives (or is entitled to receive) benefits under an LTC policy. In other words, the statute indicates you gain protection up to what the policy should pay regardless of whether it is actually paid.

If you have questions regarding whether a long-term care insurance policy is right for you, contact a trusted insurance agent. If you have questions regarding how these policies interact with Medicaid, contact a Certified Elder Law Attorney.