In our daily discussions with Reps we often get asked about LTCi policies and partnership programs. Owning a partnership-qualified LTCi policy is a good way for people to protect a portion of their retirement assets while providing a Medicaid safety net in case they need on-going care.
What is a partnership?
Long-term care partnership programs are alliances between the states and private insurance companies. These programs are specifically designed to encourage people who otherwise might plan to rely on Medicaid for their long-term care needs to purchase long-term care policies.
Owning a partnership qualified policy entitles people who deplete the policy benefits to retain specific amount of assets on a dollar-for-dollar basis and still qualify for Medicaid, provided they meet all other Medicaid eligibility requirements. For example, if yu own an LTCi qualified plan with a $250,000 policy limit, you can protect $250,000 in assets from the required Medicaid spend down.
What makes a LTCi policy partnership qualified?
A LTCi policy must meet certain requirements in order to be partnership qualified. First it must be a tax-qualified plan. Second, it must meet inflation protection guidelines as specified by the Deficit Reduction Act of 2005 (DRA). The requirements varies by age. For example, if you are under age 61 compound inflation protection is required. If you are age 61 to 76, some level of inflation protection is required. And if you are over age 76 then inflation protection is optional.
Each state has the right to determine the inflation percentages for partnership-qualified LTCi. Some states have reduced the inflation protection minimum to 1 percent. This can give the client some flexibility in planning for benefits and cost. We can help you find your state specific percentage requirements simply by calling our offices.
Also, it is important that you have your partnership training up-to-date as well. Our licensing team can let you know where you stand and help you find the resources to get the proper training if you need it.
Having the ability to offer a partnership-qualified policy has its benefits. It gives your clients a safety net should they need to apply for Medicaid. And it helps you overcome objections, ease your clients fears and assure them they are making a smart decision. Call us today and we can provide this important financial planning solution to your clients.