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Long-term Care Partnership

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Options for long term care insurance for Minnesotans

The Minnesota Long-Term Care Partnership is a public-private collaboration between long-term care insurers and Minnesota’s Medical Assistance program.  The Partnership is an example of Minnesota’s leadership in home and community-based services, which are expanded in health reform.  The Partnership enables Minnesota residents who purchase certain long-term care insurance policies to have more of their assets protected if they later need the State to help pay for their long-term care. Minnesota is using this approach to give Minnesotans greater control over how they finance their long-term care and to help support the public safety net against coming demographic pressures. Learn more at Minnesota Long-Term Care Partnership

What is the Minnesota Long-Term Care Partnership?

The Minnesota Long-Term Care Partnership provides an opportunity for individuals who purchase a Long-Term Care Partnership policy to gain additional asset protection if they later need to turn to Medical Assistance (MA) to help pay for long-term care services.  The amount of additional asset protection is based on the amount that their Partnership policy has paid in benefits.

Information on this program is available at the Minnesota Long-Term Care Partnership website.  

Why is the State promoting the Long-term Care Partnership?

The Partnership fits into the State’s overall mission of trying to encourage Minnesotans to plan how they want to live in their later years, including how they may need to finance of their long-term care needs. It encourages people to take greater control over how they finance their long-term care, and may reduce the pressure on the current system of publicly funded long-term care.

How does it work?

Currently, people must deplete most of their assets before the state will pay for their long-term care – whether it is in a nursing facility or their own home. Under the LTC Partnership, a person who buys and uses a policy worth $100,000, for example, will be able to protect up to an additional $100,000 of their assets if they later need to apply for Medicaid (known as Medical Assistance in Minnesota).

What is the Minnesota Long-Term Care Partnership?

The Minnesota Long-Term Care Partnership provides an opportunity for individuals who purchase a Long-Term Care Partnership policy to gain additional asset protection if they later need to turn to Medical Assistance (MA) to help pay for long-term care services. The amount of additional asset protection is based on the amount that their Partnership policy has paid in benefits.

Information on this program is available at the Minnesota Long-Term Care Partnership website.

Why is the State promoting the Long-term Care Partnership?

The Partnership fits into the State’s overall mission of trying to encourage Minnesotans to plan how they want to live in their later years, including how they may need to finance of their long-term care needs. It encourages people to take greater control over how they finance their long-term care, and may reduce the pressure on the current system of publicly funded long-term care.

How does it work?

Currently, people must deplete most of their assets before the state will pay for their long-term care – whether it is in a nursing facility or their own home. Under the LTC Partnership, a person who buys and uses a policy worth $100,000, for example, will be able to protect up to an additional $100,000 of their assets if they later need to apply for Medicaid (known as Medical Assistance in Minnesota).

Who should consider buying Partnership coverage?

An ideal candidate for Partnership coverage would be a reasonably healthy person in their mid-50s who has some but not a great amount of assets. For a healthy 55 year old, such a policy might cost between $60 and $90 a month, once a state tax credit is factored in. Older people can also buy policies with a single premium payment or monthly premiums that fit their budgets. There is no minimum benefit requirement for a partnership policy.

How many people do we think will participate?

Currently, there are about 180,000 long-term care insurance policies in effect in Minnesota. This is about 11 percent of all adults in Minnesota households earning at least median income. The Partnership hopes to be able to at least double this percentage in the next ten years.

Which carriers sell Minnesota Long-term Care Partnership policies?

More than 30 insurers sell long-term care insurance in Minnesota.  To sell Partnership coverage, insurers must have their policy filings certified by the State.  To view this list, go to MinnesotaHelp.info® and search on “Long-term Care Partnership insurance companies”.

What is required for a policy to be a Minnesota Long-term Care Partnership policy?

Minnesota’s Long-term Care Partnership program is one of many such programs around the country.  The requirements for Long-term Care Partnership policies are federal requirements that were passed in the Deficit Reduction Act of 2005 (DRA).  Under the federal requirements, Partnership policies must be tax-qualified and contain specific consumer protection provisions outlined in the federal law.  In addition, there is a requirement that specified inflation protection be included based on the age of the Minnesota resident.

What are the Inflation Protection Requirements of a Partnership policy?

If a policy is sold to a person under the age of 61, the policy must provide compound annual inflation protection to qualify for the Minnesota Long-term Care Partnership.

If a policy is sold to a person aged 61 through 75, the policy must provide some level of inflation protection to qualify for the Minnesota Long-term Care Partnership.

If a policy is sold to a person aged 76 or over, inflation protection is not required in order for the policy to qualify for the Minnesota Long-term Care Partnership.  However, the policyholder may wish to purchase inflation protection.

I bought my long-term care insurance policy prior to July 1, 2006. Are older policies automatically included in the Minnesota Long-term Care Partnership?

No.  The federal law that authorized Long-term Care Partnership programs did not include older policies in the program.  Carriers that participate in the Minnesota Long-term Care Partnership may offer exchanges to their existing customers.  People who have an existing long-term care insurance policy can check with their carrier to find out if their carrier is participating in the Minnesota Long-term Care Partnership and what options they have to Exchange their existing policy for a Partnership policy. 

I bought my long-term care insurance policy after July 1, 2006. Do all long-term care insurance policies sold after that date qualify for the Minnesota Long-term Care Partnership?

No.  Not all carriers participate in the Minnesota Long-term Care Partnership.  Even if a carrier participates in the Partnership, that carrier may choose to include only some of their products in the Partnership.

Also, since the Partnership requires different inflation protection levels for different ages, identical policies may meet Partnership requirements for one person and not for another.

The insurance carrier should be able to advise whether the policy qualifies for the Minnesota Long-term Care Partnership.

Where can I find more information about what happens when I apply to Medical Assistance (MA) and have a Minnesota Long-term Care Partnership policy?

The Minnesota Department of Human Services has published a brochure to answer these questions. To obtain the brochure, entitled Long-term Care Partnership and Medical Assistance Asset Protection, enter the title or the document number (DHS-5426) in eDocs.

What happens if people retire to different states?

In the short term, people must reside in another Partnership state that accepts a Minnesota Partnership policy, or return to Minnesota to use their Partnership benefits. However, we hope that most states – especially Sunbelt retirement destinations – will all have Partnerships. The federal government is required to put together a framework in which states can have reciprocity with each other.

How did the Partnerships start?

The concept of a public-private partnership for long-term care financing began in the 1980s as a pilot program in four states – California, Connecticut, Indiana and New York. Minnesota first considered the idea in 1992, when the legislature required a feasibility study. However, subsequent federal law changes made it difficult for new states to enact such plans until the Deficit Reduction Act removed such restrictions in 2006. Idaho is the only other state to receive federal approval ahead of Minnesota under the new LTC Partnership program.

How might the Partnership change the long-term care insurance market?

In addition to changing how Medicaid works, the Partnership has the potential to encourage insurers to offer policies that are less costly than current ones because the new LTC Partnership does not have a minimum benefit rule. Currently, the average policy sold is worth about four to five years of coverage. Insurers may begin selling policies with shorter durations, worth say two or even one year. That brings the cost down considerably, while still providing a reasonable level of protection through both the private insurance and the additional asset protection.