by | November 1st, 2017

Many may not understand what it means to have a “partnership-qualified” long-term care insurance plan.

At least 70% of people over the age of 65 will require some long-term care services at some point in their lives. And, contrary to what many people believe, Medicare and health insurance do not pay for the long-term care services that most people need.

With the Deficit Reduction Act of 2005, the federal government sent a clear message to Americans: paying for long-term care is your responsibility.

A Virginia Partnership for Long-Term Care-qualified policy provides you, as the purchaser, with the right to apply for Medicaid under modified eligibility rules that include a special feature called an ‘asset disregard’.

This allows you to keep assets that would otherwise not be allowed if you need to apply, and qualify, for Medicaid in order to receive additional long-term care services. The amount of assets Medicaid will disregard is equal to the amount of the benefits you actually receive under your long-term care Partnership qualified policy.

Since these policies must include inflation protection, the amount of the benefits you receive can be higher than the amount of insurance protection you originally purchased.

If you have a Partnership-qualified long-term care insurance policy and receive $300,000 in benefits, you can apply for Medicaid and, if eligible, retain $300,000 worth of assets over and above the State’s Medicaid asset threshold. In most states the asset threshold is $2,000 for a single person. Asset thresholds for married couples are typically more generous.

Years ago, you could protect your assets by creating a trust, but today only an irrevocable trust would be exempt and it would still be subject to the 60-month “look back” period. To be exempt, assets must be transferred 60 months before you apply for Medicaid. (We won’t know with 100% certainty what will happen 60 seconds from now let alone 60 months.)

Under a qualified partnership policy, personal assets in the amount of the total benefits paid are disregarded when Medicaid asset eligibility is calculated. For each dollar of benefits paid, one dollar of assets is not counted toward the eligibility limit. This means you get to keep those assets and don’t have to spend them before qualifying for Medicaid.

With a Partnership policy it means that the state will not seek to recover money spent for your care from your estate. Estate recovery means that the state can require repayment from your estate for any costs paid by Medicaid. Thirty states have filial laws that that give the state the right to require your children to reimburse Medicaid for your expenses.

If you have more questions about what to consider for your own long-term care needs in Virginia, please call us to schedule a complimentary Strategy Session: 703.760.4630 or email us at kfahmy@www.fahmyassoc.com