In an attempt to encourage consumers to purchase long term care insurance (LTCi), Ohio recently passed legislation making available partnership policies. Several insurance companies offer these plans, but not all LTCi policies are partnership qualified.
By owning a qualified plan, the insured can be eligible for Medicaid benefits through the state without depleting all of their attachable assets.
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 ($1,500 for individuals and $2,250 for couples.)
For example, if $100,000 worth of long term care insurance is purchased by a consumer and later exhausted, then the insured can retain $101,500 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 $101,500 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.
Given the cost of extended care (the average in Ohio is over $75,000 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 $120 a day (365 days a year) for four years. The total ($120 x 365 days in a year, multiplied by 4 years = $175,200.) This hypothetical couple could shelter $350,400 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 $350,400 between the two of them, their would still be a fair amount of attachable assets if the $350,400 had been 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 perio and can allow for time to shelter assets from Medicaid recovery.
Almost all LTCi coverage will contain 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.
Additionally, couples can purchase a rider that allows them to share each others 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 well spouse’s benefit pool. These are but a few of the more popular riders available with LTCi plans.
In summary, those who wish to ensure a legacy to their heirs while also providing peace of mind to their spouse and/or children 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. These consumers can pass on sizable sums to their beneficiaries and still qualify for state Medicaid benefits should they use up all of their long term care insurance benefits.
Consumers can learn more about partnership plans and coverage options at the Ohio Department of Insurance’s website.