Ohio has passed legislation allowing for partnership policies to encourage the purchase long term care insurance (LTCi).
Only a few insurance companies offer these plans, but not all LTCi policies offered today are partnership qualified.
By owning a qualified plan, insureds can be eligible for Medicaid benefits through the state without depleting all of their assets.
How Does The Ohio Long Term Care Partnership Plan Work?
In a nutshell, consumers can protect the same amount in personal assets as each dollar paid by the insurance company for long term care related benefits. In this way, consumers do not have to spend down their assets to state-mandated levels to qualify for Medicaid.
For example, if $250,000 worth of long term care insurance is purchased by a consumer and later exhausted, then the insured can retain $250,000 and still qualify for Medicaid benefits.
Other variables such as income and net worth will factor in before Medicaid benefits are immediately available, but the $250,000 in this example is protected from recovery for the insured, spouse and/or the heirs. In effect, the State of Ohio is rewarding those who plan ahead.
Who Should Consider Partnership LTCi Coverage?
Given the cost of extended care (the average in Ohio is over $85,000 a year), most should consider some form of LTC insurance. However, consumers with a moderate net worth and income may benefit the most from a qualified partnership plan. If a couple with a net worth of 3-4 hundred thousand dollars each purchases an average size policy, then they can protect their home and life savings for each other and their heirs.
An average policy can pay $175 a day (365 days a year) for four years. The total ($175 x 365 days in a year, multiplied by 4 years = $255,500.) This hypothetical couple could shelter $511,000 from Medicaid recovery should they exhaust their policy maximums.
Higher net worth couples (say those worth one million or more) might benefit less from a partnership plan if they purchased a similar policy as the one used in the example above. While they could shelter $511,000 between the two of them, there would still be attachable assets if the $511,000 was exhausted.
These clients might consider larger policy maximums, hybrid LTCi or traditional coverage that can provide benefits for at least five years. Five years is a typical look-back period. That window of time allows owners to shelter assets from Medicaid recovery.
Additional Long Term Care Benefits & Riders
Almost all LTCi coverage contains inflation protection. This allows the overall benefit amount to grow over time and will increase the amount of sheltered assets for the insured. Typical inflation riders will increase the daily benefit amount by 3-5% yearly.
Be advised that not all inflation riders will qualify for partnership coverage. In most cases, the inflation rider must compound for life. Ones that stop compounding after a set number of years will not qualify in Ohio.
Additionally, couples can purchase a rider that allows them to share each other’s benefits should one exhaust their own policy maximum. Should one spouse need care and spend all of their benefits, then that spouse can tap into the healthy spouse’s benefit pool. These are but a few of the more popular riders available with LTCi plans.
How Common Are Partnership LTC Plans?
There are several states offering these types of policies and a handful offer reciprocity. That means you can purchase your policy in Ohio, then receive care in another State.
Currently, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Idaho, Indiana, Kansas, Minnesota, Missouri, New York, Nebraska, North Dakota, Oklahoma, Oregon, Pennsylvania, South Dakota, Texas and Virginia all offer partnership long term care insurance in various forms. Rules and regulation will differ between states.
Contact Us To Compare LTC Quotes & Illustrations
In summary, those who wish to ensure a legacy to their heirs while also providing peace of mind to their families should consider a long term care insurance policy. New partnership-approved plans allow consumers to guarantee that at least a portion, if not all, of their estate, is sheltered.
Savvy consumers can pass on sizable sums to their beneficiaries without spending down all of their assets. This will allow for Medicaid benefits to begin earlier while retaining assets for a healthy spuse and/or children.
Consumers can learn more about partnership plans and coverage options at the Ohio Department of Insurance’s website.