Long Term Care Partnerships -- Questions and Answers

Long Term Care (LTC) Partnerships are authorized under The Deficit Reduction Act of 2005. Each state must choose to "opt in" the program by amending its Medicaid plan with the approval of the U.S. Dept of Health and Human Services. The LTC Partnerships program is voluntary, so some states may choose not to participate. Several states have implemented an LTC Partnership program, while several more intend to do so. The following Q & A is intended to provide agents with information about the program.

Why are LTC Partnership programs important?
The LTC Partnership Program is a collaboration between the states and private insurance industry designed to enourage people to purchase private LTC insurance. In states where the program is offered, individuals who purchase an LTC partnership policy and use up its benefits can then apply for Medicaid. If they meet Medicaid eligibility, they can receive Medicaid-covered long-term care services while protecting some or all of their financial assets that would otherwise make them ineligible for Medicaid.

What are LTC Partnerships expected to accomplish?
The proliferation of LTC Partnership policies are expected to reduce federal Medicaid long-term care spending by $40 billion over the next five years, keeping Medicaid as the "safety-net" for low-income Americans while expanding the reach of LTC insurance.

How does an LTC Partnership work?
Example: Jim buys an LTC Partnership policy that will pay benefits for 3 years at $1000 a day. He later enters a facility and his policy pays out the maximum in benefits -- $109,500. Jim can then apply for Medicaid long-term care and can protect $109,500 in assets that he would otherwise have to liquidate and spend-down to pay for his care before Medicaid would pay.

This is known as a "dollar for dollar" LTC Partnership. The amount of protected assets equals the amount that the private LTC Partnership policy pays out in benefits. Assets that can be protected are htose Medicaid would otherwise count, such as cash savings, securities and most property. LTC Partnerships do not shelter income, such as Social Security and pension income.

What are the requirements for an LTC Partnership policy?
LTC Partnership policies must.....
1. Meet the requirements of the 2000 NAIC LTCI Model Act and Regulation
2. Be tax-qualified LTCI plans
3. Have certain Inflation Protection benefits by issue age:
a. Ages up to 60: Compound inflation protection is required
b. Ages 61-75: Some form of inflation is required (i.e., simple)
c. Ages 76 and older: No requirement to have inflation protection, but it still must be offered if required by the state's LTCI regulation

NOTE: Guaranteed or Future Purchase Option inflation protection is not permitted for LTC Partnership Policies

What training requirements must agents meet to sell LTC Partnership Plans?
Training requirements vary from state to state. Please check out the requirements by contacting your state insurance department or visiting their website for more information about the LTC Partnership program in your state.

NOTE: These training requirements will apply to selling both Partnership and Non-Partnership LTCI policies, meaning an agent cannot sell any LTCI policy unless the training requirements are met.

Here are some examples of training requirements that we've seen:
-- Agents can continue to sell LTCI (Partnership or Non-Partnership) during the first year the LTC Partnership Program is implemented in the state.
-- By the end of the year, any agent who has sold LTCI (Partnership or Non-Partnership) must complete a one-time training course (not less than 8 hours). Agents are also required to complete an on-going LTCI training every 24 months (no less than 4 hours). Insurers are required to have a copy of the training certificates of their agents on file for compliance.
--Training must cover the following areas:
-----LTCI in general
-----Qualified LTC Partnership policies
-----Relationship between LTC Partnership policies and other pulblic or private coverage of LTC

Reciprocity may exist for agents who sell LTCI in more than one state; satisfying the training requirements in one state will be deemed to satisfy the requirements in most states.

Will exisiting LTCI policy owners be able to switch to an LTC Partnership policy?
"Exchanges" is an issue that is being addressed on a state by state basis with guidance from the Department of Health and Human Services.

What states currently have a Partnership agreement in place?
All states except Utah, New Mexico, Alaska, Hawaii, Mississippi and West Virginia had an agreement in place as of 7/1/09.

What states currently have LTC Partnerships available for sale?
Oregon, Idaho, California, Colorado, North Dakota, South Dakota, Nebraska, Kansas, Oklahoma, Texas, Minnesota, Missouri, Arkansas, Indiana, Kentucky, Tennessee, Alabama, Florida, Georgia, Ohio, Wisconsin, Pennsylvania, Virginia, New Jersey and Connecticut have policies available for purchase as of 7/1/09.