Federal Partnership Program
The State of Texas participates in the federal/state long-term care partnership program. The program, authorized by the federal Deficit Reduction Act of 2005 (DRA) and signed into law by President George W. Bush, gives the states the ability to provide additional asset protection to those who purchase qualified long-term care insurance policies.
The Texas Long-Term Care Insurance Partnership is a collaborative effort between private long-term care insurance providers, their authorized agents, and state government agencies. These agencies include but are not limited to the Texas Department of Insurance, the Texas Health and Human Services Commission, and the Texas Department of Aging and Disability Services.
Texas participates in the program as an incentive for Texans to plan for their long-term care needs. The partnership is a joint effort between private insurers and the state. Insurers must follow state and federal guidelines to sell partnership policies. Partnership policies have an “asset disregard” benefit, inflation protection, and tax-qualified status.
For example, if Texans exhaust the benefits in their qualified long-term care policies, they would have an equal amount of “asset disregard”. If the policy paid $350,000 in benefits, an individual would be able to protect that amount when calculating qualification for Medicaid long-term care benefits. The normal spend-down is $2,000 so the individual could keep $2,000 plus the $350,000 from the example and still be able to qualify for Medicaid benefits. 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 Texas. This means if you move from or to Texas, partnership asset protection follows you as well.
Long-Term Care Medicaid spend down is $2,000. Your spouse’s minimum monthly income allowance is $3,259.50. A spouse’s minimum asset allowance is a minimum of $26,076 up to a maximum of one-half of countable assets up to $130,380 * The home equity limit is $603,000.
For more information about the Medicaid program visit www.medicaid.gov.
Rate Stability Rules
In addition, Texas 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 Texas
A variety of products are approved in Texas for Long-Term Care planning. These include traditional plans in addition to partnership certified policies, limited-duration policies, and asset-based “hybrid” policies.
Texas does not offer any state tax incentive for qualified long-term care insurance as there is no state income tax. However, federal tax incentives are available.
Reverse Mortgages in Texas
Texas residents can use reverse mortgages for various reasons, including to produce tax-free income in retirement, reduce expenses, fund Long-Term Care Insurance, or even provide long-term health care when other options are unavailable.
You can receive a lump sum or monthly payments, which adds a lot of flexibility depending on your needs.
There are rules in Texas that apply. An eligible borrower for a reverse mortgage must be aged 62 or older. The home must be your principal residence. In addition, you should have substantial equity and have no other liens against the home.
As a borrower, you remain responsible for your property taxes, homeowners insurance, and home upkeep. If you fail to do so, it could result in foreclosure.
Learn more about reverse mortgages by clicking here.
*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.