Individuals who are doing advance estate planning may want to consider purchasing a long term care insurance policy that qualifies for the Long-term Care Partnership program. Individuals who purchase a Partnership policy will enjoy special benefits if they are faced with applying for Medicaid.
Many people fear having to spend their life savings for health care in their later years. Statistics suggest that one in five persons over age 65 will spend two years or more in a nursing home. Estimates in Colorado suggest that by the year 2025, approximately 130,000 individuals will suffer from Alzheimer’s disease, roughly as many people who currently live in Fort Collins.
Recently Colorado launched the LTC Partnership program. Under this program, individuals will be able to purchase a qualifying long term care partnership policy.
This type of policy allows consumers to protect personal assets if they have to apply for Medicaid. Under the program, LTC Partnership policy holders who apply for Medicaid coverage are able to keep their assets equal to the benefits paid under the policy.
For example, an individual purchases a LTC Partnership policy for $200,000. During the individual’s lifetime, a combination of home care, assisted living and nursing home care is used over a four-year-period and the $200,000 benefit is exhausted.
The individual then applies for Medicaid. Single individuals will be allowed to keep $200,000 in assets, plus $2000 and still receive Medicaid to receive care in the home, assisted living, and/or nursing home.
If the individual is married, the community spouse will be allowed to keep (in 2008) $104,400 community spouse resource allocation and the nursing home spouse is allowed to keep $200,000 in assets plus $2000 and still be eligible for Medicaid.
LTC Partnership policies must be approved by the State of Colorado, have an inflation protection rate of 5% compounded annually, and be issued after January 1, 2008. Policies issued on or after October 1, 2006, may be exchanged for a LTC Partnership policy at no additional cost as long as the above requirements are met.
The Partnership policies are an alternative for those individuals who wish to avoid having a Medicaid lien placed on their property and to be free from estate recovery by the State of Colorado if they own property and need Medicaid assistance with long term care.
Care should be exercised before purchasing a long term care insurance policy. When purchasing a policy, a number of variables are important to good decision making including covered services, maximum benefit, elimination period, benefit triggers, inflation protection, premiums, waiver of premiums, health underwriting, and tax treatment.
For a list of LTC Partnership policies, contact the Colorado Division of Insurance at 1-888-696-7213.
For more information, call 303-333-3482.
Eileen Doherty, M.S. is the Executive Director of Senior Answers and Services and the Colorado Gerontological Society. She has 30 years of experience in gerontology in administration, research, training and education, and clinical practice.