In 1992 California became one of four states that started offering long-term care State Partnership programs. Simply put, the partnership program rewards individuals who purchase a qualifying long-term care insurance plan by allowing them to protect assets from Medicaid spend-down rules.
The Robert Wood Johnson Foundation (RWJF) is the nation’s largest public health philanthropy and was commissioned by congress in the 1980’s to study the best way to handle the growing need for long-term care services. Medicaid was, and still is the largest payer of nursing home cost in our country and it was becoming apparent back in the 80’s that the current system of paying for long-term care through Medicaid was unsustainable. After researching the problem, RWJF proposed a plan that would make private insurers the first payer for long-term care and Medicaid the back up or secondary payer. This would be accomplished by allowing individuals who purchased long-term care insurance the ability to protect assets from the Medicaid spend-down rules and allow them to qualify for Medicaid without being broke. Congress took this a step further by allowing deduction for premiums while allowing benefits to come back tax-free.
The plans have proven quite successful as less than 5% of individuals who have a qualifying State Partnership plan end up requiring any assistance from Medicaid. It has proven so successful, that 43 states now offer the program and the remaining states are working on their own version so hopefully they will be available everywhere soon.
For those who purchase a qualifying insurance program, they have the extra advantage of knowing if they use up all of their long-term care insurance, they can now protect assets equal to what the insurance has paid out on their behalf and still qualify for Medicaid. No more going broke to become a ward of the state!
To find out more about the State Partnership programs and see examples, visit our web site at http://123longtermcare.com/ or call us with your questions at 425-748-8188.
