How Does the New York State Partnership Long-Term Care Insurance Differ from Traditional Policies?
My friend and colleague, Susan Suben, CEO of Long Term Care Associates, Inc., recently sent me this column in her spring newsletter. For more information, you can contact Susan at susansuben@31greenbush.comor visit her website, www.LongTermCareAssociates.net. Susan regularly writes and presents on this complex topic, and she can assist you in making the appropriate choice for your own policy needs.
When thinking of purchasing long-term care insurance, one should carefully consider the advantages of several NYS Partnership plans now available.
When it was created in 1993, the NYS Partnership was intended to help individuals plan for long-term health care needs and, at the same time, remove the cost of such care from state Medicaid budgets. The double goal was to benefit individuals specifically and taxpayers generally.
The original Partnership plan offered 3 years of nursing home care or 6 years of home/assisted living care, after which the policyholder could apply for Medicaid without having to spend down their assets, and without any look-back or penalty periods. The only requirement was that income would be contributed to the cost of care according to Medicaid guidelines.
Fifteen years later, the Partnership has over 60,000 policies in force, and added three new options for a total of four available plans: two total asset protection plans, Total Asset 50 and Total Asset 100; and two partial asset protection plans, Dollar for Dollar 50 and Dollar for Dollar 100. The 50 and 100 notations mean that a policyholder would receive either 50% or 100% of their daily benefit for home care/assisted living.
The partial asset protection plans are geared to individuals with moderate income levels and fixed assets, such as a house. They protect assets equal to the amount of benefits paid out by the policy. Any unprotected assets are subject to Medicaid liens and look-back periods.
The Partnership plans have several advantages over traditional or non-partnership plans. Premiums are generally lower, especially with Dollar for Dollar policies, because many of the enhancements and riders available with traditional policies are not available with carriers approved to sell the Partnership plan. Such benefits include different inflation options and shared care benefit riders. However, although the coverage is more basic, it is not necessarily less comprehensive.
For example, Partnership policies include all levels of care found in traditional policies, including home care (skilled, custodial and personal care), adult day care, assisted living, nursing home care, case management and respite care. Some Partnership plans even allow use of independent home care providers, or care by friends or family members.
Partnership policies also include inflation protection as a basic feature, one of the most important features to have in a long-term care insurance policy. The Partnership has a 5% compound inflation factor that becomes optional at age 80, which insures that your policy will have actual value when you need it. In a non-partnership plan, inflation protection is a rider that must be purchased separately, which could substantially increase the premium.
One possible drawback of a Partnership plan has historically been the limitation of asset protection if the individual moves out of NYS, which has been a factor for many people who decided against the plan. That is, you can use your Partnership benefits anywhere in the country, but you can only apply to NYS Medicaid to protect your assets, if you exhaust your benefits and still need care, for which you need to reside in NYS.
As a practical matter, with current plans, the Partnership may still be a very good choice even if you move or retire out-of-state. With a traditional policy, if you move out-of-state, exhaust your benefits and still need care, you will have to spend your assets for your additional care, which is the same scenario as the Partnership policy if you reside out-of-state. However, by choosing a Partnership Plan, you will probably pay less in premiums over the years, and will always have the option to return to NYS to take advantage of Medicaid to protect your assets.
Moreover, under the Deficit Reduction Act of 2006 and with the creation of partnership plans in states throughout the country, there may soon be reciprocity between state Medicaid departments that would permit Medicaid asset protection after policy benefits are exhausted without returning to NYS.
If, in seeking long-term care insurance to protect your assets and transfer risk, you need or wish to be economical, then a Partnership plan may be a very sound alternative for you.
