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Protecting your assets with a government-approved, long-term care partnership policy

In the old days, in order for the government pay for someone’s long-term care expenses, the person would have to spend down their assets to the “poverty level”–about $3,000 in most states.

Since 2005, and the passage of the Deficit Reduction Act, most states are allowing their residents to keep more of their assets if they own a government-approved “Long-Term Care Partnership” policy.

“Long-Term Care Partnership” policies are similar to traditional long-term care insurance policies, except they must include special consumer protection features (especially inflation protection.)

Each dollar that your long-term care partnership policy pays to you in benefits entitles you to keep a dollar of your assets, if you ever need to apply for Medicaid services.

For example:

Bill’s long-term care partnership policy pays him $400,000 of long-term care benefits.  He applies to his state to start to pay for his care.  The state disregards $400,000 of his assets when determining if he can qualify for state-funded care.

In the old days, you’d have to spend your assets down to the state-required minimums.  Now, the state will allow you to keep the minimum amounts PLUS an amount equal to whatever your long-term care partnership policy paid to you in benefits.

Your assets are protected from “Medicaid spend down” and your assets can even be protected from “estate recovery” after you pass away.

Four states have successfully run long-term care partnership programs since the 1990’s:  California, Connecticut, Indiana and New York.

Since 2005, many other states have established long-term care partnership programs including Alabama, Arizona, Arkansas, Colorado, Florida, Georgia, Idaho, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Minnesota, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Virginia, Wisconsin, and Wyoming.

As of September, 2010, Delaware, Illinois, Massachusetts, North Carolina, Vermont, and Washington have passed legislation approving long-term care partnership programs in their states.  Policies are not yet for sale in those states.

 

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About Scott A. Olson

Scott A. Olson, is the author of “The Guidebook for Making Long-Term Care Insurance Easier.” He is a licensed insurance agent and has specialized in long-term care insurance since 1995. He is licensed to sell long-term care insurance in over 40 states. Scott was born and raised in New Jersey and attended Rutgers University. Scott was a caregiver for a close relative for two years. That personal experience has made him acutely aware of how to help his clients design and choose a long-term care policy that will benefit them when they need it the most. Scott and his wife Carolyn live in Redlands, California. Scott and Carolyn have four sons.

3 comments on “Protecting your assets with a government-approved, long-term care partnership policy

  1. [...] a Partnership-Qualified Policy. Now that 40 states have “Long-Term Care Partnership programs” you do not have to buy an expensive “unlimited” long-term care insurance policy.  You [...]

  2. [...] that 39 states have “LTC Partnership programs” you can protect your assets even if your long-term care policy runs out of benefits.  Each dollar [...]

  3. More and more elder law attorneys are realizing how important (and effective) Partnership-Qualified long-term care policies can be in retirement and estate planning.

    Here’s a link to a recent article posted by a leading Alabama Elder Law and Estate Planning firm:

    http://blog.alabamaestatelaw.com/2011/06/one-reason-to-read-your-long-term-care-policy.html

    The only point on which I disagree with him is that I think the primary reason for the “asset disregard” (aka “asset protection”) is to protect assets for the healthy spouse. Protecting assets for heirs is only an “added bonus” in my mind.

    Scott A. Olson

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