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Long Term Care Insurance Partnership Plans to the Rescue

by Jack Lenenberg

What would happen financially to your spouse or your partner if financially if you were to require long term care?
Medicare and private health insurance do not pay for long term care. And Medicaid requires you to spend down to $2000 in assets to qualify for services. How would your healthy partner survive during retirement?

If your nest egg is $400,000 and your partner requires 5 years of long term care, all of your money may be depleted.

The saving grace of long term care state partnership plans

But there is an easy fix for this problem. Most states have enacted legislation to help protect assets if long term care is needed, and to encourage state residents to plan for long term care.

A State-qualified long term care insurance partnership policy is offered through a partnership of your State government and private long term care insurance companies. A partnership policy will allow a policyholder to retain assets dollar for dollar equal to the long term care insurance benefits paid out should an individual ever need to apply for Medicaid relief.

Thus, should you exhaust your long term care insurance benefits, Medicaid will disregard for eligibility purposes your personal assets equal to the amount of benefits received.

Here’s an example. Jim and Sandra have assets totaling $400,000. Jim and Sandra buy a shared long term care insurance policy with a $5000 month benefit and a 6 year benefit period. The policy has a total benefit of $360,000. Jim is diagnosed with Parkinson’s and needs long term care. The policy pays out benefits of $360,000. Normally, if Jim and Sandra were to apply for Medicaid relief she would need to spend assets down to $2000. With a Partnership long term care insurance policy, Jim and Sandra and Jim now only have to spend assets down to $362,000. $2000 plus the amount of assets equal to the long term care insurance benefits received by Jim. Thus, Jim and Sandra get to shield the retirement nest egg from being exposed, and Sandra’s retirement is saved.

Why are long term care insurance partnership plans made available?

Long term care partnership plans were introduced in four states: California, Connecticut, Indiana and New York in the 1980s as an incentive for Americans to purchase long term care insurance, and to decrease the burden on state Medicaid coffers. Today, the majority of States have enacted long term care insurance partnership programs.

Not every policy offered in the marketplace is a Partnership plan. Also, depending upon your age at issue to ensure that your policy is eligible for Partnership benefits it must include some form of automatic inflation protection. Many group long term care insurance plans do not offer automatic inflation protection and will not qualify for asset protection under your state long term care partnership program.

At LTC Partner, we think that Partnership plans are a great incentive to purchase long term care insurance. If you need care, you can feel secure knowing that your insurance policy will allow you to stay at home and receive care with dignity. But, should you spend through the benefits of your policy, you can feel better knowing that a portion of your retirement nest egg will be shielded from the Medicaid estate recovery and your spouse or partner will not be impoverished.

Get Long Term Care Partnership Plan Quotes

Comparing your long term care insurance choices and options may be daunting for you. But, we are specialists and will help you through the maze that is long term care insurance. Simply complete our long term care insurance quote request form to get started or call us direct at 1-800-891-5824 and find out what the best options are for you.

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Jack Lenenberg

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