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Long-Term Care Partnership Program Makes Policy Purchases More Attractive to Consumers

Long-Term Care Partnership Program Makes Policy Purchases More Attractive to Consumers

Few expenses can deplete a lifetime of savings as rapidly as the need for long-term care. The Long-Term Care (LTC) Partnership Program, a federally supported, state-operated initiative, helps individuals protect themselves against this possibility by encouraging them to purchase long-term care insurance policies.

Basically, the program works like this: An LTC Partnership Program-qualified policy will cover the cost of long-term care initially, after which time the policy owner will be able to apply for Medicaid to pay for additional long-term care services-but without having to spend down personal assets as would normally be required. By permitting individuals to protect a portion of their personal assets, the program is intended to provide an incentive to purchase a qualified long-term care insurance policy, a result that would benefit individual consumers and insurance companies, too, by creating a more active market for long-term care insurance.

At the same time, states participating in the program hope to save dollars by having more individuals pay at least a portion of long-term care expenses with policy benefits, thereby delaying the point in time at which Medicaid kicks in. Medicaid currently accounts for close to 49% of overall long-term care funding, while private health and long-term care insurance pay just over 7%, according to information from the National Conference of State Legislatures.

The LTC Partnership Program began in the mid-1980s. Currently, qualified policies are available for sale in 23 states, according to the Long-Term Care Partnership Program Technical Assistance Website. Most other states have programs in various stages of development or approval.

Program specifics will vary state to state. For example, some use a dollar-for-dollar model: If an individual purchasing a qualified long-term care insurance policy worth $150,000 exhausts policy benefits, he or she can qualify for Medicaid to pay for additional long-term care expenses without having to spend down $150,000 worth of personal assets. Other states use a total assets model: Individuals who purchase qualified coverage of at least a set dollar amount can protect all individual assets after they have exhausted policy benefits.

States set the requirements for qualified long-term care policy provisions. These may include whether qualified policies must be comprehensive or facility-only, and minimum daily benefit amounts.

Statistics on the ever-rising cost of long-term care services make it clear how great the need is for long-term care planning. According to Genworth Financial’s 2009 Cost of Care Survey, individuals needing long-term care services will see the following national averages:

• $183 per day for a semi-private room ($203 for a private room) in a nursing home that provides 24-hour-a-day skilled care.

• $2,825 per month for a private room in an assisted living facility providing assistance with personal care, as well as some medical care.

• $18 per hour for home health aid services provided by a non-Medicare-certified but state-licensed agency (for example, assistance with bathing, dressing, transferring, etc.).

• $46 per hour for home health aid services, sometimes including skilled care, when provided by a Medicare-certified agency.

• $10 per hour for adult day care services in a community-based setting.

Companies exploring adding a long-term care benefit to their voluntary benefits offerings should check to see whether partnership program plans are available in their states. The advantages of such policies-in a time when the need for long-term care services is on the rise, along with the cost of such services-can help make long-term care a voluntary benefit that employees truly welcome.