Navigating Long-Term Care in Illinois

Illinois participates in the partnership program. Owners of qualified LTC Insurance can enjoy dollar-for-dollar asset protection from future costs of extended health care. Care costs in Illinois are expensive and growing every year.

There are a wide variety of care options available in Illinois for those who require long-term health care services, including 

• adult day care centers
• assisted living facilities
• continuing care retirement communities
• home health care providers
• memory care facilities
• rehabilitation facilities
• traditional nursing homes

Many qualified care providers are available, but costs are increasing due to increasing demand. The state has many insurance solutions available to safeguard income and assets from the high costs and burdens of aging. 

Partnership is now available In Illinois

On January 1, 2019, the State of Illinois became the 44^th state to implement the federal/state partnership program which was authorized by federal law in 2005.  The financial burden of long-term care can be so large that, for many individuals (particularly those with moderate and upper-middle-income) the only option is Medicaid, which requires spending down all assets in order to qualify to receive long-term care benefits unless an advance plan is in place prior to needing care. Long-Term Care Insurance becomes a primary way to plan with the added benefit of the partnership program which features additional asset protection.

The Illinois General Assembly declared that Medicaid is not intended to cover the majority of long-term care expenses. Medicaid is the largest source of funding for long-term care in the United States, making the financing of long-term care costs a significant issue for both state and federal budgets. Furthermore, the growth in spending by both entities via through Medicaid will likely continue to increase as the American population ages.

Federal Partnership Program

One way to help address climbing Medicaid expenditures is to encourage individuals to plan for their own long-term care events. As an incentive, the Long-Term Care Partnership Program was created. This program is a public-private partnership between states and private insurance companies that aims to reduce future Medicaid costs for long-term care by delaying or eliminating dependence on Medicaid.

With a qualified Long-Term Care Insurance policy, a consumer can shelter an amount equal to the amount of benefits paid out by the policy and still qualify for Medicaid’s Long-Term Care benefit. This “dollar-for-dollar” asset protection safeguards your savings and allows for a considerable amount of assets to be protected. Usually, an individual/couple would have to exhaust a majority of their savings in order to qualify for Medicaid’s Long-Term Care benefit.

This program rewards Illinoisans by providing additional asset protection in the event they spend all their benefits in their Partnership Long-Term Care policy. If you exhaust benefits in your policy you can access Medicaid’s Long-Term Care benefits without going through the normal asset depletion rules. This means you can shelter your assets on a dollar-for-dollar basis equal to the amount of benefits received from your partnership policy. This is called “asset disregard”. This allows you to protect your savings affordably.

Policy Example

For example, your policy pays out $400,000 in benefits but you still require care. You earn a Medicaid asset disregard that allows you to protect that same amount over the asset level you would otherwise be forced to meet in order to be eligible for Medicaid’s Long-Term Care benefit. The Partnership Program also protects those assets after death from Medicaid estate recovery.

Reciprocity

Most states have reciprocity with other states' long-term-care partnership programs including Illinois. This means if you move from or to Illinois your partnership asset protection follows you as well.

Medicaid

The Illinois Medicaid program will pay for long-term health care if an individual has little or no income and assets. The Long-Term Care Medicaid spend down is $2,000. A spouse’s minimum asset allowance is $109,560. Your spouse’s minimum monthly income allowance is $2,739 * The home equity limit is $636,000.

For more information about the Medicaid program visit www.medicaid.gov.

Illinois Medicaid Estate Recovery Program

When individuals apply for Medicaid in Illinois and require long-term services and supports, their estate will be subject to the Medicaid Estate Recovery Program, otherwise known as MERP. When a Medicaid recipient dies, the state can recover the money spent on their long-term health care.

Under the Illinois Estate Recovery Program, the assets subject to recovery will include your home and other real estate, bank accounts, other financial assets, vehicles, cash, and even household goods. All deceased assets are subject to recovery, including holdings in most trusts.

Remember, Medicaid will provide long-term care services only if you have little or no income and assets. However, the state will never require a living spouse to move out of their home. 

The state has a broad estate recovery program that relies heavily on recording a lien upon any real property in which the patient has an ownership interest. The purpose of the lien is to recover the cost of Medicaid benefits provided after the individual's death upon the property or transfer of the property.

The state may "look back" up to 60 months before application for Medicaid long-term care services to determine when income was reduced and resources were transferred.

If a person had a qualified Partnership Long-Term Care Insurance policy, the total amount of benefits paid by the policy would be sheltered from asset recovery. 

State Resources for Aging and Long-Term Care in Illinois

There are a variety of state resources available in Illinois to help residents and their families with issues of aging and long-term health care. Many of these services benefit low-income families. 

• Illinois Area Agencies on Aging (AAA)  - 800-252-8966

There are thirteen AAA service areas in Illinois. These agencies work with local service providers to help older Illinoians living in their communities find the programs and services they need as they get older and require help and assistance and counseling. The primary mission of each AAA office is to plan and coordinate services and programs for older people in their respective regions.

• Illinois Long-Term Care Ombudsman -800-252-8966

The Illinois Long-Term Care Ombudsman protects and improves the quality of life for Illinois residents living in various long-term care facilities. Ombudsmen work to resolve any problems regarding their care quality and safety.

The role is to advocate for older people in Illinois to improve the quality of life for those living in long-term care facilities. The Ombudsman's office investigates complaints and advocates for the resident's rights.

• Senior Health Insurance Program (SHIP)  - 800-252-8955 

SHIP is a free statewide health insurance counseling service for Medicare beneficiaries, families, and caregivers. The goal is to help Illinoisians who are Medicare eligible get the most from their medical coverage. 

SHIP counselors offer advice about saving on health care costs and navigating the Medicare program.

• Chicago Senior Services  - 312-744-4016

Chicago Senior Services offers a variety of support services citywide to address the diverse needs and interests of older adults, including those who are active and healthy, residing in long-term care facilities, and older people who are fragile and may home confined. 

These services include advocacy, family support, senior centers, and caregiving assistance programs. Families of older adults in Chicago can call 311 to request senior well-being checks from Chicago Senior Services if they are concerned about an elderly loved one.

Rate Stability Rules

In addition, Illinois 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 Illinois

A variety of products are approved in Illinois for Long-Term Care planning. These include traditional plans, including partnership certified policies, short-duration policies, and asset-based “hybrid” plans.

Tax Incentives

There are no current state tax incentives available at this time, federal tax incentives do apply.

Reverse Mortgages in Illinois

In Illinois, reverse mortgages can be an opportunity for those who are "house rich and cash poor" to access money from their homes. The money can fund retirement, provide money to pay for Long-Term Care Insurance, or even provide the funding for care when a crisis hits and no other plan is in place.

If you are age 62 or older, own your home, have substantial equity in your home, a reverse mortgage may be an option to consider. You can secure a loan against the equity in your home. The loan is paid out as income, tax-free. Since you retain the title to the property, the lender cannot seize the home.

The borrower does not pay back the loan until they sell the property, permanently move out of the home, or passes away. In the case of a couple, it is the second to move out or die that triggers repayment. Until these events take place, you can live in the home and make no payments at all.

Learn more about reverse mortgages by clicking here.

LTC Tax

Illinois is one of several states that is considering following the State of Washington in implementing a tax on income for any person who does not own a qualified Long-Term Care Insurance policy.

What is unknown is if they implement the tax plan if they will offer any reasonable time for state residents to purchase qualified policies if they do not already own one. 

It is highly recommended to speak with a qualified specialist to consider your options - Work With a Specialist | LTC News

_{*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.}