The Long-Term Care Partnership Program: Protecting Your Assets from Medicaid Spend-Down
The Long-Term Care Partnership Program: Protecting Your Assets from Medicaid Spend-Down
CORE INSIGHTS
- The Medicaid Trap: Medicaid only pays for nursing homes if you are broke. Normally, you must “spend down” your life savings to qualify.
- The Partnership Shield: A state-approved “Partnership” LTC policy allows you to protect assets dollar-for-dollar. If the policy pays $300k, you can keep $300k above the Medicaid limit.
- Estate Preservation: This strategy creates a “stop-loss” on your estate. You don’t need infinite insurance; just enough to cover your nest egg’s value.
The fear of long-term care costs isn’t just about the bills; it’s about losing your legacy. The LTC Partnership Program allows middle-class retirees to access Medicaid’s safety net without impoverishing themselves.
What-If Scenario: The $500k Spend-Down
| Strategy | Insurance Benefit | Protected Assets |
|---|---|---|
| No Insurance | $0 | $2,000 (Medicaid Limit) |
| Partnership Policy | Paid $300,000 | $302,000 (Protected) |
Visualizing the Asset Shield
*Figure 1: Medicaid Eligibility. The Green bar represents assets you keep thanks to the Partnership policy.*
Strategic Action Steps
When shopping (#131), ask the agent: “Is this Partnership Qualified?” It must include inflation protection (usually 3% or 5%) to qualify.
Calculate the amount you want to leave to heirs (e.g., $250k). Buy a policy with a total benefit pool of exactly that amount. Optimize the premium.
If moving states, verify the new state honors the Partnership (Reciprocity Compact). Most do, but CA and NY have unique rules.
The Bottom Line: Who Should Choose What?
- Assets $300k – $1M: The Partnership Program is your best friend. It bridges the gap between “too rich for Medicaid” and “too poor to self-insure.”
- Assets > $2M: Self-fund (#131) or use Hybrid policies for tax benefits.
Frequently Asked Questions
What is the ‘Dollar-for-Dollar’ Asset Disregard?
For every dollar your Partnership LTC policy pays out, you can keep a dollar of assets above the Medicaid limit. If it pays $300k, you keep $300k.
Do all LTC policies qualify?
No. The policy must meet specific state requirements, including Inflation Protection. You must explicitly ask for a ‘Partnership-Qualified’ policy.
Is the protection portable between states?
Mostly, yes, via the Reciprocity Compact. However, some states (CA, NY, IN, CT) have unique rules, so verify before moving.