Thanks to the Deficit Reduction Act of 2005, dozens of states have now enacted what are called “DRA Partnership” long term care plans. This refers to a partnership between private industry and public funding of long term care, the latter in the form of Medicaid.1 Our government has incentivized the purchase of LTC insurance by synchronizing these programs in a very particular way.
Once an individual purchases a DRA Partnership policy and uses some or all of the policy benefits, the amount of the policy benefits used will be disregarded for purposes of calculating eligibility for Medicaid. This means that they are able to keep their assets up to the amount of the policy benefits that were paid under their policy or coverage. The assets are also disregarded during Medicaid estate recovery.
For every $1 in LTC claims paid from a Partnership-Qualified (“PQ”) plan, $1 is disregarded from Medicaid’s asset eligibility rules at application, and the same $1 is also disregarded during Medicaid estate recovery. Special care should be taken when designing a PQ plan. Its total lifetime account value, relative to one’s underlying estate, should be considered. Inflation should also be considered.
Special agent training is required to sell PQ plans.
Please note that the states of CA, CT, IN, and NY each instituted Partnership programs which pre-dated the DRA; these four “grandfathered” states are entirely unique in their features.
What States Have Approved Long-Term Care Partnership Insurance For Sale
Effective Date — The date that the U.S. Department of Health & Human Services approves the State Plan Amendment. Original Partnership indicates one of the four original Partnership States.
Reciprocity — Whether or not the State will honor partnership policies from other DRA partnership states when it comes to allowing asset disregard when filing for Medicaid. All DRA states plus New York, Indiana and Connecticut have reciprocity. California does not.
|State||Effective Date||Policy Reciprocity|
|District of Columbia||Not Filed||—|
|New Mexico||Not Filed||—|
|New York||Original Partnership||Yes|