Federal Partnership Program
On July 17, 2007, Governor Edward G. Rendell signed Act 40 into law in an effort to address the growing need for long-term care services. Act 40 grants strong consumer protections for purchasers of long-term care insurance and establishes a “Long-Term Care Partnership.” This program offers Pennsylvanians the opportunity to provide for their own needs while helping to conserve taxpayer resources.
Normally individuals must spend down, or exhaust, their resources, leaving many families reliant on public assistance. People who purchase a Pennsylvania Long-Term Care Partnership Policy may still qualify for Medical Assistance after depleting their insurance benefits, without losing the asset protection the partnership policy provides.
The Commonwealth of Pennsylvania says Long-Term Care is a personal responsibility — its risk and cost should not be ignored. Medical Assistance is a safety net, but only for those truly in need. Everyone who is financially and medically qualified should begin now to save, invest, and insure for long-term care.
Authorized under federal law (Deficit Reduction Act of 2005), Long-Term Care Partnership encourages Pennsylvanians to purchase long-term care insurance by providing asset coverage equal to the benefits paid by the policy. This is called dollar-for-dollar asset protection. For example, a person whose qualifying policy paid $300,000 in benefits for care would be entitled to keep $300,000 in assets if that individual needed to apply for Medical Assistance (Medicaid) after exhausting benefits in the LTC insurance policy. This is referred to as “dollar-for-dollar asset protection.”
The Partnership Program also protects those assets after death from Medicaid estate recovery.
Most states have reciprocity with other states' long-term-care partnership programs including Pennsylvania. This means if you move from or to Pennsylvania your partnership asset protection follows you as well.
Long-Term Care Medicaid spend down is $2,400. A spouse’s minimum asset allowance is minimum of $26,076 up to a maximum of one-half of countable assets up to $130,380. Your spouse’s minimum monthly income allowance is $2,155. * The home equity limit is $603,000.
For more information about the Medicaid program visit www.medicaid.gov.
Rate Stability Rules
In addition, Pennsylvania 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 Pennsylvania
A variety of products are approved in Pennsylvania for Long-Term Care planning. These products include traditional policies, including those which are partnership certified, short-duration plans, and asset-based “hybrid” policies.
Pennsylvania does not offer any state tax incentive for qualified Long-Term Care insurance. However, federal tax incentives are still available.
*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.