Catastrophic Protections of LTC Insurance:
Partnership Program:
Long-Term Care (LTC) Partnership Program is a collaboration between private long-term care insurance companies and a state's Medicaid program. The primary goal is to encourage individuals to purchase private LTC insurance, which can then be used to pay for long-term care services and potentially protect assets from being spent down to qualify for Medicaid. For every dollar of benefit that is received by the insured, the state provides protection for that dollar against the spend down of assets. If the policyholder eventually needs Medicaid for long term care, the portion of their assets protected by the Partnership policy will not be counted towards the Medicaid eligibility. This makes it easier to qualify for Medicaid benefits by reducing the amount of assets that need to be spent down
Most states have partnership, and most participate in reciprocity. The ones that don’t have Partnership are Alaska, District of Columbia, Hawaii, Illinois, Massachusetts, Michigan, Mississippi, Utah, and Vermont.
Some states require 5% compound inflation on the LTC policy, others 3% and others may be based on age.
MassHealth Lien Protection:
In Massachusetts, the Long Term Care (LTC) Act protects homes from Medicaid recovery when the recipient has qualifying long-term care insurance. This exemption is unique to Massachusetts. Only traditional LTC policies qualify and must include at least two years of coverage and benefits of at least $125 per day. The LTC Act protects a home from MassHealth's estate recovery, presently, just over 1 million in value. The act's purpose is to protect Massachusetts residents, allowing them to remain in their homes as long as possible.