Medicaid is a program set by the government that specifically tackles and provides long term care needs. However, this program has an asset level requirement that is quite low. This means that your assets have to be nearly exhausted to qualify. The tendency is for you to spend down in order to be given benefits. That was the case until the government started pairing up with long term care companies.
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This collaboration between the government and the different private insurance providers paved the way for a new type of long term care insurance—the partnership policy. If you sign up for this, you can protect your assets and still qualify for Medicaid.
Before partnership policies came into picture, buyers of long term care insurance were to choose between a reimbursement policy and an indemnity policy.
In a reimbursement policy, the insurer will pay off the exact amount that you have incurred for care and expenses. What remains of your maximum benefit will be returned to your pool to be used for other claims in the future. Meanwhile, an indemnity policy pays off your maximum benefit regardless of the actual amount of your expenses. You can use what remains of your benefits any way you want.
Back then, most people would opt for the indemnity policy, however, this type costs more than a reimbursement policy. Those with financial limitations have no choice but to purchase a reimbursement policy with the thinking that at least, they were covered with insurance.
But with the onset of partnership policy, people are given more options; thanks to the tie-up between long term care companies and the government.
Partnership policy originated in 4 states—California, Connecticut, Indiana and New York, but due to the Deficit Reduction Act of 2005, this type of policy has been made available in all 50 states.
Basically, you need to reside in the state where you wish to receive care in order to qualify. Furthermore, your policy needs to be protected against inflation, too. Most policies have this feature so this requirement is not hard to meet.
Medicaid Asset Protection is the main feature of a partnership policy. It provides a shield to a portion of your asset that amounts to your total benefits. Say your policy’s maximum benefit is at $300,000, in effect, it protects $300,000 worth of your assets against Medicaid’s asset boundaries. You can be qualified to claim Medicaid benefits after you have utilized your policy’s benefits.
A partnership policy offers a win-win solution when it comes to getting covered for long term care. First, you get the benefits that a traditional policy has. More so, you would not be anxious should you need more care after you have claimed your benefits as you can still be covered with Medicaid. Most importantly, you get to preserve your assets. Assets that you toiled for and intend to pass on to your loved ones or heirs.
Long term care is a national issue that needs to be dealt with. It’s good to know that it is being addressed with the best efforts. Though there’s still room to improve when it comes to this issue, this tie-up between long term care companies and the government can be considered as a good start.
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