Federal Partnership Program
The State of Iowa participates in the federal/state partnership program which was authorized under federal law in 2005. The Iowa Long-Term Care Partnership program provides an alternative to depleting assets by forming a partnership between Medicaid and private long-term care insurers.
Consumers who purchase Long-Term Care Partnership policies may be able to qualify for Medicaid before spending down all of their assets. In what is called “dollar-for-dollar” asset protection, the state will disregard an amount equal to the amount your long-term care insurance policy paid out in benefits. This means even a smaller policy will provide outstanding asset protection. Partnership policies must meet state and federal requirements. They are only marketed by licensed insurance professionals who have completed eight hours of training required by the State of Iowa Insurance Division.
Look at this example. Your Iowa Long-Term Care Partnership policy pays out $285,000 in benefits when it exhausts. The state would then disregard that same amount when it calculates your eligibility for the Medicaid Long-Term Care benefit. You can design your policy to protect the appropriate amount of assets based on your individual situation. The protected assets will also be exempted from Estate Recovery in the amount equal to the benefits paid by the partnership policy.
Most states have reciprocity with other states' long-term-care partnership programs including Iowa. This means if you move from or to Iowa your partnership asset protection follows you as well.
Long-Term Care Medicaid spend down is $2,000. A spouse’s minimum asset allowance is minimum of $25,728 up to a maximum of one-half of countable assets up to $128,640. Your spouse’s minimum monthly income allowance is $3,216. * The home equity limit is $595,000.
For more information about the Medicaid program visit www.medicaid.gov.
Rate Stability Rules
In addition, Iowa consumers enjoy additional peace-of-mind as the state has adopted Long-Term Care Insurance Rate Stability Rules. These rules, developed the National Association of Insurance Commissioners, makes it much harder for an insurance company to get an approved rate increase.
Products Approved in Iowa
There are several products approved in Iowa for Long-Term Care planning. These include traditional plans, including partnership certified policies, short-duration policies, and asset-based “hybrid” plans.
Iowa permits tax deduction from net income for premiums paid for long-term care insurance coverage to the same extent allowable under federal law and to the extent not otherwise deducted in computing Adjusted Gross Income. Federal tax incentives exist as well.
*The federal government sets a new minimum and maximum amounts each year, but states can set their own minimum requirements at any level between the federal limits. This information is based on the best available sources.