The LongTerm Care Training Series

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The Long-Term Care Training Series

• What is the Partnership for Long-Term
  Care?
• August 2008

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This Training Will

• Briefly define long-term care insurance
• Define the Partnership for Long-term Care
• Provide a brief history of the Partnership
• Describe the Partnership model
• Explain the features of Partnership policies
• Present case studies to help apply the
  information learned in this presentation

Also referred to as the Long-term Care
Partnership
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Long-term Care (LTC) Insurance

• Type of private insurance policy that covers
  various LTC services
• Sold individually or through groups such as
  employers
• Designed for middle and upper income individuals
  who want to protect considerable financial assets
  and can afford to pay premiums
• Policy types and premiums can vary by age, health
  status and gender
• Policies vary by
• Length of coverage
• Types of services covered (i.e. nursing home,
  assisted living, home or community-based care)
• Other factors

A detailed explanation of LTC insurance can be
found in the What is LTC Insurance? training
presentation which is a part of this series at
www.hapnetwork.org.
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The Partnership for
Long-term Care (PLTC)

• A public-private program between state Medicaid
  agencies and private LTC insurance companies
• Designed to encourage the purchase of long-term
  care insurance
• Aimed at middle-income individuals who
• Want to plan for possible long-term care needs
• Have considerable assets to protect
• Can afford a long-term care insurance policy
• These policies protect assets while allowing for
  access to long-term care benefits through the
  state Medicaid program

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Medicaid PLTC

• Medicaid is a state and federal health program
  for low-income individuals
• Pays for certain LTC services for low-income
  older adults
• States administer Medicaid programs and determine
  benefits
• Medicaid requires individuals to meet certain
  income and asset tests to qualify for services
• Medicaid does not generally allow for asset
  protection for long-term care insurance policies
• With Partnership programs, states can amend their
  Medicaid programs to allow for asset protection
• States can amend their state Medicaid plans to
  exempt assets of Partnership program participants
  from Medicaid eligibility requirements
• Individuals still have to meet other Medicaid
  eligibility requirements

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How Do Partnership Policies Work?

• Individuals purchase a Partnership policy from a
  private insurance company
• Once an individuals needs LTC, the benefit, as
  outlined by the policy, will cover these services
• Works like traditional LTC insurance with added
  consumer protections
• If the policys benefit is exhausted1,
  individuals may be able to qualify for coverage
  under Medicaid
• Medicaid assets limits would not apply
• Individual must meet other Medicaid eligibility
  requirements such as income limits
• Provides protection from Medicaid estate recovery

1It may not be necessary for policy benefits to
be fully exhausted before applying for Medicaid.
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History of the PLTC

• In 1988, the Robert Wood Johnson Foundation
  (RWFJ) funded its development in four states
• California, Connecticut, Indiana and New York
• States had a choice between two models
• Dollar for Dollar amount of assets protected is
  equal to the amount of insurance coverage
  purchased
• Total Assets individuals purchase a
  comprehensive policy that protects all of their
  assets when the need to apply for Medicaid
  benefits arises
• Hybrid states could choose plans that included a
  combination of both options
• Omnibus Budget Reconciliation Act (OBRA) of 1993
  restricted ability for additional states to
  replicate Partnership programs

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PLTC Expansion

• Deficit Reduction Act (DRA) of 2005 lifted
  restrictions and allowed additional states to
  participate
• Many states are now implementing the program
• RWFJ is sponsoring an expansion project in
  several states
• 18-month initiative providing 10 states with
  extensive technical assistance, as well as
  funding up to 50,000, to develop Partnership
  programs
• States include AR, CO, GA, MI, MN, OK, OH, SD,
  TX, VA

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Mini Midterm ExamLets test our knowledge to see
what weve learned so far.

• 1. Partnership policies are sold and administered
  by state governments.
• True or False
• 2. The Partnership program is a public-private
  program between the federal government and state
  Medicaid programs to encourage the purchase of
  LTC insurance.
• True or False
• 3. Most LTC insurance policies, including
  Partnership policies
• a. Charge premiums that vary by age
• b. Are designed for individuals with low
  incomes
• c. Vary by length of coverage
• d. A B
• e. A C
• 4. Medicaid is a state and federal health program
  for low-income individuals.
• True or False

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Mini Midterm Exam

• 1. Partnership policies are sold and administered
  by state governments.
• True or False
• 2. The Partnership program is a public-private
  program between the federal government and state
  Medicaid programs to encourage the purchase of
  LTC insurance.
• True or False
• 3. Most LTC insurance policies, including
  Partnership policies
• a. Charge premiums that vary by age
• b. Are designed for individuals with low
  incomes
• c. Vary by length of coverage
• d. A B
• e. A C
• 4. Medicaid is a state and federal health program
  for low-income individuals.
• True or False

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LTC Partnership Models

• There are two models for Partnership programs
  dollar-for-dollar total assets
• Indiana uses a hybrid of the two
• Both models
• Require contribution of income to spend down to
  Medicaid eligibility
• Are subject to state Medicaid rules
• The DRA designated dollar-for-dollar as the model
  new Partnership states can implement

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Dollar-for-Dollar Model

• Allows individuals to buy a LTC insurance policy
  that protects a specified amount of assets
• Every dollar the insurance company pays out in
  claims will be deducted from resources counted
  when considered for Medicaid eligibility
• For example If 50,000 were paid out in claims,
  50,000 of an individuals assets would not be
  counted when s/he is being considered for Medicaid

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PLTC Policy Features

• The following section explains some of the
  additional features of Partnership policies.
• Inflation Protection
• Reciprocity
• Tax Qualification

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Policy Features Inflation Protection

• Requires an increase in benefits over time to
  ensure that the policy maintains meaningful
  benefits in the future
• Four original Partnership states required 5
  compound inflation protection on all Partnership
  policies
• This issue proved to be controversial with
  Partnership expansion
• Inflation protection is an option with
  traditional LTC insurance polices
• The DRA created a compromise on the issue
• The DRA requires age-specific inflation
  protection for Partnership policies
• Age 60 or younger annual compound inflation
  protection
• Age 61-75 some type of inflation protection
• Age 76 or older inflation protection is not
  required

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Policy Features Reciprocity

• Allows policyholders to purchase a policy in one
  state, move to another state, and still receive
  asset protection from the Medicaid program in
  their new state of residence
• Policyholders are subject to the reciprocity of
  their current state of residence
• DRA required the development of reciprocity
  standards
• Benefits paid under Partnership policies will be
  treated the same in all Partnership states
• States who choose not to be subject to
  reciprocity standards must opt out of these
  agreements
• States can choose to opt in or out of reciprocity
  agreements at any time

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Policy Features Tax Qualification

• Allow individuals to receive certain tax
  advantages when buying a PLTC policy
• Policyholders can include all or a portion of the
  premium as a federal income tax deduction
• Tax qualifications vary by state and individual
  policy
• Individuals should discuss the tax implications
  of their PLTC policy with their insurance agent
  and tax advisor

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Collateral Effects of PLTC

• The effectiveness of PLTC in reducing the
  financial burden on Medicaid is still unclear
• There are additional notable outcomes
• Have had an impact on consumer protections
• Improved insurance regulations for all LTCI
  policies
• Expanded coverage of many LTCI policies to
  include home and community-based services
• Emphasis on inflation protection rider
• Target potential purchasers at younger ages
• Most buyers of Partnership policies are in their
  50s 60s
• However, average age for commercial LTC insurance
  policy is 67

Source Long-Term Care Partnership Program
Issues and Options. School of Public Health.
Ahlstrom, A., Clements, E., Tumlinson, A.
Lambrew, J. The George Washington University, The
Health Strategy Consultancy LLC, 2005.
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Case Scenario 1

• John Mews, a single, 52 year old male, has
  recently decided to inquire about financing
  options for his possible LTC needs. Johns
  current annual income is approximately 90,000,
  and he has financial assets that total just over
  250,000. Following the expansion provisions of
  the DRA of 2005, his current state of residence
  recently launched a Partnership program. When
  considering the PLTC policy options, John is
  wondering if LTC insurance, specifically a PLTC
  policy, would be appropriate for him. John also
  wonders if he could reduce his monthly premium
  costs by choosing a PLTC policy without inflation
  protection.
• Would John be a viable candidate for a PLTC
  policy? Why or why not?
• Would John be able to purchase a PLTC policy
  without inflation protection? Why or why not?

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Case Scenario 1 Answer

• Financially, John may be a viable candidate for a
  PLTC policy. He has a relatively high income,
  which means he would likely be able to afford the
  premiums, and he has assets to protect. Since
  John is relatively young, his premiums will be
  considerably less expensive if he purchases a
  policy now. However, Johns health may affect the
  price of his premiums and whether or not he will
  qualify for a policy.
• 2. John would likely not be able to purchase
  a PLTC policy without inflation protection. As
  outlined by the DRA of 2005, all new PLTC
  policies must include annual compound inflation
  protection for individuals age 60 or younger at
  the time the policyholder purchases the policy.

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Case Scenario 2
Sandy Howard is a 58 year old woman who has
recently contacted her local SHIP regarding
questions about the reciprocity of her PLTC
policy. Sandy is currently paying a monthly
premium on her policy and has not yet received
any policy benefits. Sandy purchased her PLTC
policy two years ago while living in State A.
State A has opted in to the PLTC reciprocity
agreement. Sandy has since moved to State B,
which has chosen to opt out of the PLTC
reciprocity agreement. 1. Since State B has
opted out of the reciprocity agreement, will
Sandy be entitled to assets protection even
though her original state of purchase opted in?
2. Why or why not?
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Case Scenario 2 Answer

• Sandy may not be entitled to reciprocity in State
  B.
• 2. Policyholders are subject to the reciprocity
  policy of their current state of residence. This
  rule generally applies even if they purchased a
  policy in a state that chose to opt in to the
  reciprocity agreement. However, it is important
  to remember that the benefits of Sandys policy
  are payable in any state.

For more information on PLTC reciprocity
agreements, please read Medicaid Eligibility
Issues for Long-Term Care Insurance Partnership
Programs. Center for Health Care Strategies,
Inc. M. Meiners, March 2008.
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Further Information

• Center for Health Care Strategies
• Center for Health Policy Research Ethics
• National Clearinghouse for Long-Term Care
  Information
• Georgetown University Long-Term Care Financing
  Project
• Robert Wood Johnson Foundation