Great News for People with Long-Term Care Insurance Policies

  Main Takeaways:

  • The Long-Term Care Partnership allows those with eligible long-term care insurance policies to qualify for Medicaid benefits and protect a larger amount of their assets.
  • 52% of people turning age 65 who will need some type of long-term care services in their lifetimes.
  • Currently, in order to be eligible for long-term care Medicaid, a married couple can keep assets in an amount up to $119,220.00 and a single person can keep a maximum of $2,000.00 in assets. The partnership increases these limits.

Medicaid Long-Term Care Partnership Effective June 1, 2015

The much-awaited Medicaid Long-Term Care Partnership may be effective as early as June 1, 2015. This partnership will allow those who have eligible long-term care insurance policies to qualify for Medicaid benefits and protect a larger amount of their assets, which will also be protected from Estate Recovery and instead be able to pass to the family.

The State of Michigan was approved for the Long-Term Care Partnership several years ago; however, the program could not be implemented until the State first established an Estate Recovery program. Although Estate Recovery has been effective in Michigan for over four years now, it is unclear as to why the State has only recently moved toward implementing the Long-Term Care Partnership.

52% of people turning age 65 will need some type of long-term care services in their lifetimes. Therefore, regardless of why, the news of the development is being celebrated by the Elder Law community.

What is the Long-Term Care Partnership?

The Long Term Care Partnership provides a financial incentive for people to purchase their own long-term care insurance policies to help pay for their future long-term care expenses. Currently, in order to be eligible for long-term care Medicaid, a married couple can keep assets in an amount up to $119,220.00 and a single person can keep a maximum of $2,000.00 in assets.

With the Long-Term Care Partnership in effect, these asset limits will be increased, potentially dollar-for-dollar, based on the amount of the long-term care insurance benefit.

For example, John and Mary are married and John is in a nursing home. Based on their assets, John and Mary will be allowed to keep the maximum asset allowance of $119,220.00 in order for John to be eligible for Medicaid. John also has a long-term care policy that has a benefit of $200,000.00.

As a result of the Long-Term Care Partnership, John and Mary will now be allowed to keep a larger portion of their assets, potentially up to $319,220.00, and John will still qualify for Medicaid benefits. This amount will also be protected from Estate Recovery and be able to pass to his family upon his death.

The same will be true for a single person.

For example, Ellen is widowed and in a nursing home. In order to be eligible for Medicaid, she is allowed to keep a maximum of $2,000.00 in assets. Ellen also has a long-term care insurance policy that has a benefit of $100,000.00.

As a result of the Long-Term Care Partnership, Ellen will be allowed to keep a larger portion of her assets, potentially up to $102,000.00, and still qualify for Medicaid benefits. This amount will also be protected from Estate Recovery and be able to pass to her family upon her death.

long-term care

What Does This Mean?

This means that a person can protect their “nest egg” for their children or, with the right type of planning, even protect a specific asset such as a family cottage. Additionally, the long-term care insurance benefit will not need to be exhausted before a Medicaid application is submitted and benefits are approved.

While there are still many unknowns about how the State of Michigan will implement this policy, including what requirements the long-term care insurance policies will need to meet or if the protected asset amount will be in addition to or in place of the current asset limits, it is clear that it will allow people to qualify for Medicaid benefits while protecting a greater amount of their assets.

Contact Us

Start Planning Your Future Today

Remember, it is never too early to start planning. This is especially true for long-term care insurance where the earlier you plan, the better. Given the upcoming changes, it may be time to consider adding a long-term care insurance policy to your estate plan. SSR Law Office can help you evaluate your estate plan and discuss the benefits of long-term care insurance.