179

Chapter
16 Partnership
Policies

The significant problems we face

cannot be solved at the same level of
thinking we were at when we created them.
— Albert Einstein

I n addition to tax incentives offered by states and the federal

government, some states are offering even more generous
incentives to plan ahead with LTC insurance. One program offers a
promising solution to the huge challenge of providing long-term
care to an increas­ing number of aging Americans. The “Partnership
for Long-Term Care” program uses a combination of public and pri-
vate money to pay for care.
The Partnership program was initially offered in four states: Cali­
fornia, Con­nec­ticut, Indiana, and New York. Other states are con-
tinually being added to this list. If you live in a Partnership state, ask
your advisor or LTC Planning and Insurance expert to offer advice
about whether or not a Partnership policy is suitable for you. If LTC
insurance is the option you are relying on for planning for long-term
care, Partnership policies can be a good value.

History and Objectives of the Partnership Program

In 1986, the Robert Wood Johnson Foundation, a charitable
organization instrumental in the development of the Partnership
pro­gram, issued grants to 10 states to fund the study of long-term
care de­livery and financing. The grants were also issued to assist
states in developing solutions for the problem of funding long-term
care for an increasing number of aging Americans.
The outcome of this research and assistance was the creation of
the Part­nership for Long-Term Care program. The objectives of the
program include the following:
180 Chapter 16: Partnership Programs

• Cap the amount of public monies used to finance long-term

care.
• Improve consumers’ understanding of the challenges of financ-
ing long-term care.
• Reduce consumers’ fears of impoverishment due to a need for
long-term care.
• Make LTC insurance more readily available to consumers.
Standardized Requirements of Each Partnership Policy
The program requires standardized benefits that make the Part­
nership policies a unique consideration. Partnership policies must:
• Include inflation protection.
• Offer protection against unreasonable rate increases.
• Require agents offering Partnership policies to be specific­ally
trained and receive Partnership certification.
• Include Care Coordination. This benefit may extend a policy’s
benefits and may assist the policyholder in lo­cat­ing care pro-
viders (see Chapter 14: Submitting a Claim).
• Allow claims to be made even if the policyholder moves from
the state in which the policy was issued. How­ever, in order to
benefit from the “asset protection” component of the policy
(explained below), the claimant would need to move back to
the issuing state. The exceptions to this rule are Indiana and
Connecticut, both of which approved a reciprocity agreement
in 2001.
• Protect you if your state decides to discontinue the Partner­
ship Program. Your policy remains contractually protected as
long as premiums are paid.

Partnership Companies are Superior

The Partnership program policies are private LTC insurance
underwritten by a few select high-quality insurance companies.
Partnership program insurance companies must go through a
stringent approval process in order to offer Part­nership policies.
Companies willing to become approved to offer Partnership poli-
cies are making a major commitment to the LTC insurance industry,
making them superior to other LTC insurance companies.
 Chapter 16: Partnership Programs 181

How Does the Partnership Program Work?

Partnership policies contain an “asset protection” component
that allows people to shelter some or all of their assets by link-
ing the purchase of private LTC insurance with future eligibil-
ity for Medicaid, the welfare program (Medi-Cal in California). A
policyholder first uses their Part­nership policy benefits to pay for
long-term care expenses. If and when the benefits of the policy are
exhausted, the policyholder will become eligible for Medicaid with-
out being required to first spend all their assets on care. This allows
a person who owns an LTC insurance policy certified through the
Partnership program to qualify for Medicaid without having to fol-
low the usual “spend-down” rules that impoverish most families.
(Some of these Medicaid rules are explained in Chapter 4.) The
Partnership program essentially allows you to keep some or all of
your assets without requiring you to totally deplete your money
paying for long-term care.
Some Partnership programs are based on a dollar-for-dollar
model of coverage: For every dollar of LTC insurance coverage
that you purchase under the Partnership program, a dollar of your
assets is protected from the spend-down requirements for Medicaid
elig­ibility. Some states offer a “bonus”: Facilities in those states
must offer Partnership policyholders a 5% discount off their pub-
lished daily room rates.
Example of How a Partnership Policy Works
If a policyholder wants to protect $500,000 in non-exempt assets,
he or she could purchase a Partnership policy with a maximum
lifetime benefit of $500,000. When the policyholder becomes eligible
for benefits, the insurer will pay for long-term care expenses up to
$500,000, plus any inflation-adjusted benefits that have increased
the coverage due to the in­flation protection benefit of the policy.
After the total maximum lifetime benefit is paid out by the insur-
ance company, the policyholder could then be eligible for Medicaid
benefits but maintain assets up to the total dollar benefit paid by
the policy.
Some Partnership programs are based on the total assets pro-
tection model. With this model, Partnership certified policies
182 Chapter 16: Partnership Programs

must cover a certain number of years in a facility or home care,

with minimum daily benefit amounts that are raised annually.
Once the Partnership policy benefits are exhausted, the Medicaid
eligi­bility process will allow the policyholder to keep an unlimited
amount of assets. However, an individual’s income must normally
contribute to the cost of care. The New York Partnership is a total
assets protection program and formally states that “the goal of
the Partnership is to help people finance long-term care without
impoverishing themselves or losing their life savings. At the same
time, the program will help to reduce New York’s massive Medi­caid
expenditures.”
The Partnership program is a true “partnership” between the
policyholder and the government because it allows participants to
keep some or all of their assets, if they purchase a Partner­ship LTC
insurance policy and use their insurance benefits prior to applying
for assistance from Medicaid.

Future of the Partnership Program

The success of the Partnership program in the original states
that offered it has encouraged other states to seek waivers so they
can also offer partnership programs. In fact, Congress passed the
Deficit Reduction Act in 2006, which is rapidly expanding the avail-
ability of Partnership programs to other states. Ask your Objective
Financial Advisor and LTC Planning and Insurance expert if a
Partnership program is available in your state.
 Chapter 16: Partnership Programs 183

key Partnership
Programs
points
➤ Partnership programs use a combination of
private and public dollars to pay for long-term
care.
➤ Under a Partnership program, policyholders
can keep some or all of their assets and still
qualify for Medicaid. Long-term care insurance
is used first to pay for long-term care expenses.
When the policy benefits are exhausted, the
policyholder may become eligible for Medicaid
without having to spend down all their assets.
➤ Insurance companies that offer Partnership
policies are superior to insurance companies
that do not.
➤ Most experts believe that programs such as the
Partnership program offer the most promising
solution to financing the long-term care crisis.
➤ The Deficit Reduction Act was passed in 2006
and made it possible for Partnership policies
to expand into additional states.