What Advisors Need to Know About Long-Term Care Plans

At a conference this weekend, the subject of State Long-term Care Partnership Program came up.

I never heard of it but the speaker said Texas has joined the program, Qualified State Long-Term Care Partnership Program, in 2008, created by the Deficit Reduction Act (DRA) of 2005.It's goal is to incentivize individuals to buy a private LTC insurance policy, because long-term care is not covered by Medicare or other health insurance plans.There are few private long-term care insurance plans that exist but most are unaffordable, leaving more than ninety percent of seniors uninsured for nursing home care.It's a broken system. In 2002, there were 102 companies offering LTC plans but today there are 12.Alliance for Health, a nonpartisan, not-for-profit organization says 37% of Americans believe they will need long-term care.A 2010 Genworth and Age Wave study discovered 67% actually need it for at least 3 years.AP-NORC 2018 Research claims most adults age 40 and older who aren't currently receiving long-term care say it is at least somewhat likely they will need care someday. So, people are getting wiser.The research group found the median monthly cost of a semi-private room in a nursing home was $7,44, the median assisted living facility cost $4,000, and a full-time home health aide cost $4,195.Here's how most people pay for it:

72% pay out-of-pocket

12% paid by Medicare for short-term care in nursing homes, rehab

30% covered by Medicaid

75% haven't discussed it

Medicaid covers long-term care services, but to access it, individuals have to deplete their assets until they have less than $2,000 in savings, a system that literally encourages poverty.Related: How Seniors Want to Live TodayI spoke to an agent, Michael Ashille, Borden Hamman Agency in Dallas. Michael filled me in on the qualifiers for a partnership plan:

The policy must be a traditional LTC plan

It must offer compound inflation up to age 75

There may be a minimum benefit

How it works: Through the Partnership Program, Mary earns a Medicaid asset disregard that permits her to keep an additional $100,000 over the asset level she would normally have to meet in order to be eligible for Medicaid coverage. After her death, the Partnership Program also protects those assets from Medicaid estate recovery.The typical client is someone who knows a family member or friend go through the long-term care process and sees the expense of it.Many older adultsare not aware of this program, but we should be. The DRA authorized states to offer Medicaid "dollar-for-dollar asset disregard" or "spend down protection" for people who buy and use a Partnership-qualified long-term care insurance policy-referred to as a Partnership policy. Learn about your state's program