Insurance Law

What is the relationship between Medicaid and long-term care insurance policies?

Long-term care insurance is available to protect your needs over time due to a chronic health condition, illness, or disease. Designed to provide hands-on help with the activities of daily living, such as eating, bathing, and dressing, long-term care insurance can be used to protect your independence, your ability to live on your own, and your ability to enjoy life to the fullest extent possible with your health condition. 
Long-term care insurance policies are not a part of Medicaid or any governmental health care program. You can purchase long-term care insurance policies that are individually tailored to your needs. Therefore, long-term care insurance policies can be very different from one another, in that they provide for different types of services as needed. For instance, some long-term care insurance policies cover only stays in nursing homes and assisted-living facilities. Other long-term care policies cover only services that might be needed in the home. 
As with any type of insurance policy, there are limitations on the benefits and services that long-term insurance will cover. If you cannot afford long-term care insurance, or if your long-term care insurance policy benefits have run out, you may qualify for Medicaid, a national health insurance program administered by individual states. While eligibility requirements and benefits differ from state to state, you typically must have a fairly low income and few assets. Eligibility for Medicaid is governed by strict rules about the amount and types of income and assets that you can have while received Medicaid coverage.
Due to the fact that Medicaid and long-term care insurance policies both provide similar services that a person might need in his or her lifetime, Congress passed the Long Term Care Partnership Program (LTCPP, which is a federal law aimed at protecting assets of persons who have long-term care insurance policies whose benefits have been exhausted, or who need additional services not covered by their long-term care insurance, and who now must apply for Medicaid coverage. Because of the protections it provides, the LTCPP encourages people to purchase long-term care insurance policies.
Under the Federal Deficit Reduction Act of 2005, states became free to develop Qualified State Long Term Care Partnership Programs, which offer long-term care insurance policies that qualify policyholders for protection under the LTCPP. These state programs offer long-term care partnership policies that are specifically designed for people who have purchased long-term care insurance, but who might also later need to apply for Medicaid. By purchasing a partnership policy, policyholders may be able to better protect their assets in the event that they need to apply for Medicaid benefits. Typically, these policies benefit policyholders by sheltering certain amounts of assets from the usual Medicaid rules. In other words, if you have received coverage under such a policy, you may be able to retain more of your assets in the event that you later must receive Medicaid benefits.
Unfortunately, not all states have Qualified State Long Term Care Partnership Programs, and some states will not accept long-term care insurance policies that have been purchased in other states for their programs. Therefore, it is important to check with your state’s Medicaid agency or department of insurance in order to determine which programs your state might offer in the area of long-term care insurance.
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