What if you are a middle income individual that wants long term care insurance (LTC) but can’t afford a LTC policy? If and when the time comes when you need long term care you likely have too much money to qualify for Medicaid, so what to do?
Millions of individuals are in the same boat, but only a handful have ever heard of the 2005 federal program called the Qualified State Long-Term Care Partnership Program.
Section 6021 of the Deficit Reduction Act (DRA) allows states to offer Medicaid dollar-for-dollar asset disregard, otherwise known as spend down protection. By purchasing a Partnership-qualified long-term care insurance policy from a private insurer, the individual can protect their personal assets up to the LTC policy limit. When the LTC benefits run out Medicaid will kick in after otherwise exhausting most of the individual’s assets paying for care. Among other benefits, Partnership qualified LTC policies offer inflation protection as well.
Example: Say you bought a Partnership qualified LTC insurance policy and received $100,000 in long term care benefits. Because it was a Partnership qualified LTC policy, Medicaid asset disregard is applied, meaning you keep the $100,000 and still qualify for Medicaid. In addition, the $100,000 is protected from Medicaid estate recovery after your passing.