New “Partnership” LTC Policies Help Protect Your Assets

Medicare and Medicaid may not deliver what you think.
By Mike Ashley, Senior Benefits Consultants, Inc.

According to AARP, long-term care (LTC) expenses represent the single biggest threat to your retirement nest egg. This is driven, in large part, by statistics that show 70% of those over the age of 65 will require some sort of "care" in their lifetime. Most care will be received at home or in an assisted living facility. Medicare covers only short-term rehabilitative care in a nursing home or at home leaving a big gap for funding long-term expenses.

Currently, over 50% of nursing home residents are on Medicaid.  It is certainly possible to qualify for Medicaid, but not until you have spent almost every penny of your own money (leaving only $2,000 in Kansas, or $999.00 in Missouri). After that, Medicaid can pay for nursing home care, provided you are in a nursing home that accepts Medicaid.  Forget home care.  And here’s the kicker!  If you qualify for, and receive funds from Medicaid, the state will try to recover these funds from your estate at your death.

The cost to Medicaid of paying for this care has the program teetering on the brink of insolvency.  In an effort to alleviate some of this burden,  and encourage people to take some responsibility for their own care, most states, including Kansas and Missouri, have approved the use of “State Partnership Long Term Care Policies”.  These policies are available from a variety of insurance companies and they must meet certain criteria set forth by the Federal Government.

How do “Partnership” policies work?  If you exhaust your benefits of, lets say, $400,000 and still need care, the “Partnership” policy allows you to exempt $400,000 from Medicaid spend down and still qualify. This is a far better plan than relying totally on Medicaid. Under most projected scenarios, Medicaid will be out of funds in the near future.

Long Term Care Insurance that covers home care, assisted living, and nursing home care is not for everyone. It is, however, important to at least consider it as part of your retirement planning.  Contact your SRA Benefits representative for more information.