Navigating Long-Term Care in Michigan

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

There are a wide variety of care options for those who require long-term health care services. For those who are planning, there are many available Long-Term Care Insurance options to choose from.

The variety of quality care options available throughout Michigan for those who require long-term health care services include:

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

Top insurance companies have several insurance options to help residents safeguard income and assets, protect lifestyles, and preserve a legacy. Plus, policyholders will have access to quality care options giving loved ones the time to be family instead of caregivers.

Plus, all tax-qualified Long-Term Care Insurance policies in Michigan have several consumer protections in addition to federal tax benefits.

Federal Partnership Program

Michigan now participates in the federal/state partnership for long-term care program. The Michigan Long-Term Care Partnership Program is a partnership between the state government and private insurance companies to assist individuals in planning for their long-term care needs. Insurance companies must follow state and federal guidelines, and agents must be licensed and trained to sell partnership policies. The idea is to provide a consumer with financial protection for the costs of long-term care with a safeguard for additional asset protection known as “dollar-for-dollar” protection or “asset disregard.”

Long-Term Care Insurance policies that qualify for the Michigan Long-Term Care Partnership Program may protect the policyholder’s or certificate holder’s assets through a feature known as “Asset Disregard” under Michigan’s Medicaid program. Asset Disregard means that the amount of a policyholder’s or certificate holder’s assets equal to the amount of long-term care benefits received under a qualified Michigan Partnership Program insurance policy will be disregarded for the purpose of determining the insured’s eligibility for Medicaid. This generally allows a person to keep assets equal to the insurance benefits paid on his/her behalf under a qualified partnership policy. 

Policy Example

For example, if your Michigan Partnership Long-Term Care Insurance policy paid $450,000 in benefits when they are exhausted you are able to shelter that same amount when they compute your eligibility for the Medicaid Long-Term Care benefit. This would allow you to keep a large amount of savings above the minimum asset allowance. The Partnership Program also protects those assets after death from Medicaid estate recovery.

Medicaid

Long-Term Care Medicaid spend down is $2,000. A spouse’s minimum asset allowance is minimum of $26,076 up to a maximum of one-half of countable assets up to $130,380.   Your spouse’s minimum monthly income allowance is $2,382. * The home equity limit is $603,000.

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

Rate Stability Rules

In addition, Michigan 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 Michigan

There is a variety of approved products which are available in Michigan 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 for long-term care insurance, federal tax incentives still apply.

Reverse Mortgages in Michigan

Reverse mortgages are available in Michigan. A reverse mortgage is a home equity loan where the borrower does not have to make payments.

This type of mortgage can increase monthly income, eliminate mortgage payments, and even fund Long-Term Care Insurance. However, there are many rules in Michigan on these products, and you should seek the help of a qualified and licensed mortgage broker. 

If you have significant equity in your home and you and your spouse are at least 62 years old, you can get a reverse mortgage to turn your equity into funding long-term health care, pay for an LTC Insurance policy, pay bills and add to your retirement lifestyle.

The home must be the principal residence without any tax liens. 

Learn more about reverse mortgages by clicking here.

LTC Tax

Michigan 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.}