The long-term care partnership program is an initiative that was outlined in the Deficit Reduction Act of 2005. Each state can decide whether or not to choose to enact the program for their residents. It is not mandatory.

The purpose of the long-term care partnership program is to encourage consumers to buy long-term care insurance to help relieve the financial pressure on the Medicaid program. Lawmakers realize that Medicaid will be unable to sustain the current financial obligations in the future as more baby boomers retire and this program is intended to help reduce the burden.

If a state does not have a long-term care partnership agreement in effect, a policyholder who exhausts all of their benefits under a long-term care insurance policy will then have to pay for care out of their own funds. Medicaid will not offer any assistance until almost all of available funds and assets are depleted.

If a state has enacted a long-term care partnership agreement, the same policyholder that has exhausted all policy benefits will be allowed to keep an amount of funds that equals the total sum of all policy benefits paid out by their long-term care insurance. This means that Medicaid can begin paying for their care much sooner. This also means that they would not be completely wiped out by long-term care costs.

The long-term care partnership program has been steadily adopted by an increasing number of states and an overwhelming majority either has already put the program into effect or has passed the legislation necessary to do so.

Although the program outline was provided by the federal government each state may make certain amendments and changes as it sees fit. For that reason, the partnership programs may vary from state to state.

Some issues that may change depending on the state are the following:

 Will the state grandfather older long-term care insurance policies into the program that were purchased before the partnership legislation was enacted?
 What specific inflation protection benefits will the state allow for qualified long-term care insurance policies?
 Will the state allow reciprocity for partnership policies that were sold in other states?

It is difficult to keep up with all of the individual state’s requirements. Here is a link to a useful website that tracks these changes and is an excellent source of information on state long-term care partnership programs: State Long-Term Care Partnerships