Iowa LTC Partnership Program
Long-term care costs can be significant, and Iowans have a few options to cover this major expense such as: paying out of pocket (aka private pay), Long-Term Care Insurance (LTCI), or Medicaid. For those who have purchased LTCI, the Long-Term Care (LTC) Partnership Program can help prevent a crisis if policy benefits are exhausted and Medicaid becomes necessary. This program combines LTCI benefits with special Medicaid eligibility rules to offer additional coverage.
The LTC Partnership Program was conceived in the 1980s to encourage Americans to purchase private LTCI policies and reduce reliance on Medicaid for long-term care costs. Initially, only four states participated, but the Deficit Reduction Act of 2005 allowed more states to offer LTC Partnership Programs. Many states, including Iowa, implemented their own programs.
The State Partnership Program is a joint federal-state initiative, so each state must follow specific federal guidelines while also instituting their own version of the program. This means the LTC Partnership Program varies by state.
Iowa's LTC Partnership Program is a collaboration between the state and independent insurance companies to offer specialized insurance policies that grant policyholders exclusive Medicaid asset exemptions. Not all LTCI policies qualify for the partnership program, as they must adhere to the requirements outlined in the Deficit Reduction Act and meet state-specific conditions.
How does the Iowa LTC Partnership Program work? (See examples at the bottom of the page)
For policies that meet Iowa's LTC Partnership Program requirements, policyholders can retain an increased asset limit if they deplete their LTCI benefits and need to apply for Medicaid. This higher asset limit is provided on a "dollar-for-dollar" basis, meaning that for every dollar of insurance benefits paid on a person's behalf, their countable asset limit for Medicaid purposes will increase by the same amount. This approach was designed to stabilize Medicaid spending and motivate people to purchase LTCI instead of relying solely on Medicaid for long-term care funding.
Is the Iowa LTC Partnership Program a good fit for you? The State Partnership Program is available in almost every state, including Iowa, making it an important topic to discuss during estate planning. LTCI should be purchased while you are in good health, so it's crucial to discuss this planning option early to increase the likelihood of qualifying for a policy. If you're unsure whether you would qualify or would like to discuss this as an asset preservation strategy, give us a call and we’ll put you in touch with someone who can help.
A person may be eligible for Medicaid when the person meets all of the following conditions:
♦ The person is aged 65 or older.
♦ The person:
1. Is the beneficiary of a qualified long-term-care insurance policy, or
2. Is enrolled in a prepaid health care delivery plan that provides long-term care services.
♦ The person is eligible for Medicaid under one of the following coverage groups except for excess resources:
1. Ineligible for SSI or SSA due to residence in a medical institution,
2. In the 300% group, or
3. Receiving home- and community-based waiver services.
♦ The excess resources do not exceed the amount of long-term-care insurance benefits paid out under the person’s qualified long-term-care insurance policy. (This amount is called the asset adjustment.) The asset adjustment is exempt from estate recovery for the member and the member’s spouse.
The Long-Term Care (LTC) Partnership program is a cooperative effort between private insurers and state government to encourage people to plan ahead and provide for their long-term health needs. An LTC partnership policy:
♦ Must meet the minimum standards established for long-term care insurance policies and certificates as established by the Iowa Insurance Division.
♦ Has identifying information included in the policy or attached to the policy to indicate that it is a qualifying long-term insurance policy.
The insurer provides the beneficiary a quarterly report which includes the amount paid in the last quarter and total amount paid on behalf of the insured.
In addition, the insurer is required to report data on each partnership policy sold under the Long-Term Care Partnership program to a national database. The national database then reports this information to each state’s insurance department. The information reported includes:
♦ Notice of when benefits are paid under the policy,
♦ The amount of those benefits, and
♦ Notice of termination of the policy.
Iowa participates in a national reciprocity agreement with other states. If a person moves to Iowa and has a partnership policy that was purchased in another state, the policy can carry over to Iowa for the person to be eligible for an asset adjustment if the person applies for Medicaid in Iowa.
The amount of the disregard is equal to the amount of the insurance benefits paid to or on the behalf of the person. The insurance benefits do not have to be fully exhausted before the disregard can be applied. If the person is approved for Medicaid and the policy continues to pay benefits, the asset adjustment can continue to increase.
Iowa DHS subtracts the total amount the policy has paid on the person’s behalf from the person’s total resources. They then compare the remaining resources to the resource limit to determine Medicaid resource eligibility.
EXAMPLES:
1. Mr. J buys a long-term-care partnership policy. The policy provides for $100,000 in long-term-care coverage. Several years later, Mr. J needs nursing home care. His partnership policy covers most of the costs for three years before the $100,000 benefits are exhausted by payment for his care.Mr. J applies for Medicaid. He is able to protect $100,000 for his resources and still qualify for Medicaid to help pay for his long-term care if he meets the other eligibility criteria.
2. Mr. S buys a long-term care partnership policy that provides $100,000 in coverage. Several years later, Mr. S needs long-term care services and his policy begins to pay him a monthly benefit. Eventually, Mr. S applies for Medicaid home- and community-based waiver services. At the time of application, Mr. S has $90,000 in countable resources. His long-term care policy has paid out $88,000 in benefits with $12,000 remaining. The DHS caseworker calculates his resources for Medicaid as:
$90,000 Mr. S’s current resources
-$88,000 Benefits paid out under the LTC policy
- $2,000 Medicaid resource limit
= $0 Remaining countable resources
Mr. S is eligible for Medicaid because the amount paid under his partnership policy ($88,000) combined with the Medicaid resource limit ($2,000) equals his total countable resources ($90,000). If his partnership policy continues to pay benefits, Mr. S can protect additional resources.