Arizona's Long-Term Care Partnership Program Provides Additional Asset Protection

More people are learning about the consequences of changing health and aging. Long-term care has been in the news, in part due to an aging society and as a result of the impact of the COVID-19 virus crisis. Many Americans discovered that health insurance and Medicare, including supplements, will not pay for most long-term care expenses. As a result, retirement accounts were drained, and family members found themselves juggling caregiver responsibilities and their own careers and families. 

With the Deficit Reduction Act of 2005 (“DRA”), the federal government sent a clear message to Americans — paying for long-term health care is generally your responsibility. The Act made it more difficult to qualify for Medicaid-paid long-term care to help make sure money was available for the poor. It also expanded the Partnership Program to encourage more people to add long-term care insurance to their retirement plan.

The State of Arizona implemented the Long-Term Care Insurance Partnership Program as authorized by this law. It provides an Arizona resident who purchases a qualified Long-Term Care policy to safeguard their hard-earned savings and investments even if they exhaust all the benefits in their qualified Long-Term Care Insurance Policy and qualify for Medicaid. 

Dollar-for-Dollar Asset Protection

The purpose of the Arizona Long-Term Care Insurance Partnership program is to make the purchase of even a small Long-Term Care policy meaningful by linking these special policies with Medicaid for those who continue to require care.

This is referred to as “asset disregard.” If you exhaust your benefits, the state will disregard the amount the policy paid for care in calculating your eligibility for Medicaid. Usually, the long-term care Medicaid spend-down is $2000. A living spouse has a minimum asset allowance. 

If you didn’t have a long-term care policy, you would pay for your care from your own savings since health insurance, Medicare, and Medicare Supplements pay for only a small amount of skilled care services and pay nothing for what is called “custodial care” which is what most people require. Custodial care is primarily help and assistance with activities of daily living (“ADL’s”). However, if you have an LTC policy, your policy would pay for this care. If the policy is a Partnership policy, it will provide additional asset protection.

For example, if you have $450,000 of assets and your policy paid out $400,000, the state would disregard $400,000. That would leave $50,000 in countable assets toward the spend-down. If a person has $250,000 in assets and the policy paid out $300,000, the individual would protect their entire estate.

Inflation Options Required for Partnership

These policies are very affordable, especially if purchased in your 40’s and 50’s when your health is generally good. Premiums are based on the amount of benefit purchased, your age at application, and your health. Partnership plans require inflation options based on your age at the time you get the policy.

• 60 and younger: automatic compound inflation
• 61–75: any inflation protection (compound, simple)
• 76 and older: inflation protection is discretionary

These plans are comprehensive and pay for all areas and types of care, including care at home (skilled, semi-skilled, and homemaker services), adult day care centers, assisted living, memory care, and nursing homes.

Not every Long-Term Care Insurance policy is partnership certified. You should work with an experienced Long-Term Care specialist who works with the top insurance companies to help you determine if coverage is suitable and if your health qualifies for coverage. Every company has different underwriting criteria. 

Cost of Long-Term Care Increasing Every Year

The cost of long-term care services varies depending on location. Arizona costs continue to increase every year, according to the LTC NEWS Cost of Care Calculator. 

Policy design should be based on your future or current retirement planning, the amount of assets you are protecting, and your budget.   

Click here for information from the State of Arizona.

Forty-five states offer Partnership Long-Term Care Insurance.