State Long-Term Care Partnership Programs Benefit Consumers

Author: Duane Lipham, CLTC

Both state and federal governments have begun to realize that long-term care costs have the potential to be a major budgetary problem in the not too distant future. A significant contributing factor to this outlook is the large numbers of baby boomers who will be retiring soon and moving into the time of life when long-term care will most often be needed.

As a result, lawmakers have begun steps to encourage consumers to take responsibility for their own long-term care needs and purchase LTCI (long-term care insurance). One of the most promising initiatives thus far is the Partnership program.

Four states originally pioneered this concept several years ago: California, Connecticut, Indiana, and New York. The federal government permitted the expansion of this program and laid out the basic guidelines in the Deficit Reduction Act of 2005. Now each state can individually decide whether it chooses to participate or not.

The basic premise of the Partnership program is that it allows the purchaser of a LTCI policy to shelter an amount of funds equal to the amount his policy pays out to him in benefits and still qualify for state assistance through Medicaid if he exhausts all of his benefits and still needs care. This assures that LTCI Partnership policy owners will never have to be impoverished to receive state assistance even if their need for care outlasts the benefits of their LTCI policy.

This is a clear benefit to consumers because they no longer have to buy policies that contain lifetime benefits to insure that long-term care costs will never wipe out their life savings. They can choose a lower benefit period instead, perhaps 3 - 5 years, which is very adequate coverage for the vast majority of consumers.

The Partnership program is also a win for state Medicaid programs as they will no longer be the first resort for paying for long-term care costs when consumers purchase LTCI.

There are several states that are in the process of adopting Partnership guidelines of their own. These states include: Colorado, Florida, Idaho, Maryland, Maine, Minnesota, North Dakota, Nebraska, Ohio, and South Dakota. There are also about a dozen other states that have introduced legislation aimed at considering a Partnership program for their residents as well.

Of course, other solutions are also needed to help ward off the looming financial crisis that long-term care costs may soon bring. But the Partnership program is at least a positive first step in the right direction.