insurance

LTC insurance prevents financial wipeout

Purchasing long-term care insurance might have saved the Manns and others like them from this economic disaster, but many people with modest incomes are reluctant to purchase it because they haven't been able to afford policies that really provide help.

Partnership for Long-Term Care

Recently a coalition of insurance companies, nonprofits and government organizations has come up with a solution known as Partnership for Long-Term Care. It encourages people to purchase a modest amount of long-term care insurance, leaving them still eligible for Medicaid if they spend up the insurance. And it preserves their savings dollar for dollar of insurance purchased.

Result: Spouses who live in the community aren't impoverished and those who need nursing care for a long period of time continue to have some savings to cover costs that Medicaid doesn't pay. There may even be a little money left to leave behind.

Private insurance companies sell partnership policies. They work like this: If a partnership policyholder, a single person or a couple, buys $250,000 in benefits, they will be able to leave $250,000 in the bank or keep $250,000 in other personal assets such as a rental property and still qualify for Medicaid.

The federal budget legislation that authorized these policies required that the partnership plans be inflation adjusted, so the value of the policy will rise with time, and benefits will keep pace with the rising cost of care.

States have been supportive of the partnership plans because they promise to cut back on tax dollars spent.

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So far these partnership programs, which were authorized by the federal Deficit Reduction Act of 2005, are available in about half of the states. In the other half, legislation spelling out the details still hasn't passed. To find out if the plan is offered in your state, contact your state insurance regulator.

While the laws are different in every state, in general the following information is true no matter where you buy a partnership plan, according to the Insurance Information Institute; Mark Meiners, professor in the Department of Health Administration and Policy at George Mason University; and Chad Shearer, attorney and program director for the Center for Healthcare Strategies.

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