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Partnership for Long Term Care

[ Overview ] [ Program Highlights ] [ History ]

Overview

Mark R. Meiners, Ph.D., Director

In 1988 The Robert Wood Johnson Foundation (RWJF) began funding the Partnership for Long-Term Care, a public/private alliance between state governments and insurance companies to create long-term care insurance programs. With a goal of solving a portion of the long-term care financing problem, the RWJF awarded grants to four states--California, Connecticut, Indiana, and New York--to work with private insurers to create insurance policies that were more affordable and provided better protection against impoverishment than those generally available. The resulting Partnership for Long-Term Care combines private long-term care insurance with special Medicaid eligibility standards. It was hoped that the program would stimulate market development of long-term care insurance policies in three key areas: quality, affordability, and coordination. The Partnerships provide an incentive for insurers to offer high quality products and for consumers to protect themselves from the high cost of long-term care.

During the development phase of the program two program models emerged. California and Connecticut are using the Dollar for Dollar Model, while New York is using the Total Assets approach. Indiana uses a hybrid of the two models. Insurers participating in a partnership must meet a special set of criteria before selling these special long-term care insurance policies. To date, there are more than 20 insurers participating in the Partnership Programs in the four states. Several insurers are filed in three or four states. For up to date lists of insurers participating see each of the four Partnership state web pages.

Following the implementation of the Connecticut Partnership program in 1992, a number of states initiated efforts to replicate the partnership program. Attachment 2 provides more information on these replication activities. However, due to the impact of the passage of the Omnibus Reconciliation Act of 1993 (OBRA '93), most of the states simply ceased their efforts at implementation. Attachment 3 provides more details on OBRA '93. This language has now been revised as part of the 2006 Deficit Reduction Act which allows replication of this program to other states.

Mark Meiners, Ph.D., Director of the Partnership for Long-Term Care, notes that "we still have work to do to educate the public that long-term care is not somebody else's problem, but a reality that is likely to cost in the hundreds of thousands of dollars for many American families. It simply makes sense for people to purchase protection in the healthy years before long-term care devours a family's accumulated savings and forces them into destitution. It can provide peace of mind if and when the need arises."

Program Highlights

State Highlights

California www.dhs.ca.gov/cpltc
The California Partnership Program markets its product to individuals through agents, as well as to state employees as a benefit option via the California Public Employee Retirement System (CalPERS). The California Partnership for Long-Term Care provides a variety of tools to assist both consumers and agents, including a video, long-term planning summits, and a variety of web-based resources.

Connecticut www.CTpartnership.org
The Connecticut Partnership began sales of Partnership-approved policies in April 1992, the first of its kind in the country. The Connecticut Partnership offers a variety of web-based resources for long-term care planning in general and for the Partnership in particular.

Indiana www.IN.gov/fssa/iltcp
The Indiana Partnership has been marketing long-term care insurance since 1993. The Indiana Partnership initially used the dollar-for-dollar model in the development of its insurance product; however, Indiana revised its asset protection model in 1998 to provide additional consumer flexibility. Indiana consumers can purchase dollar-for-dollar asset protection up to a State-specified dollar amount, or total asset protection through the purchase of coverage that equals or exceeds the State-specified level. Partnership sales have grown rapidly since the product expansion, driven by total asset coverage.

New York www.nyspltc.org
The New York Partnership has experienced strong sales since the program's inception. New York uses the total assets model, which requires insurers to meet a somewhat different set of criteria to be certified to issue policies. It has since added several versions of the dollar-for-dollar model as new consumer options.

Tax Deductibility of Long Term Care Insurance Premimums

Partnership policies in all four states meet standards to qualify for tax advantages under the Health Insurance Portability and Accountability Act (HIPAA).

In 1996, HIPAA was signed into law. The legislation was designed partly to provide favorable tax treatment to "federally qualified" policies. Policies sold before January 1, 1997 are generally considered to be tax qualified. Policies sold after December 31, 1996 must provide a number of consumer protections, as well as specifying criteria that a covered individual must meet before any benefits can be paid.

Individuals who are covered by tax-qualified policies are allowed to deduct their premiums, up to a maximum limit (provided the taxpayer itemizes deductions and has medical costs in excess of 7.5 percent of adjusted gross income).

Dollar-for-Dollar Reciprocity Between Connecticut and Indiana

Legislation passed by each state several years ago and approved by the federal government's Centers for Medicare and Medicaid Services in 2001 created reciprocity between Connecticut's and Indiana's Medicaid programs for granting asset protection in the determination of Medicaid eligibility. The Connecticut and Indiana reciprocity agreement is the first of its kind in the country and represents the first step in portability of the Medicaid asset protection benefit.

Under the agreement, Indiana Partnership policyholders who move to Connecticut will be able to receive dollar-for-dollar Medicaid asset protection if they apply to Connecticut's Medicaid program. The same is true for Connecticut policyholders who relocate to Indiana and apply to Indiana's Medicaid program.

For more information regarding Connecticut and Indiana Dollar-for-Dollar Reciprocity, please link to the State of Connecticut's Special Bulletin for Advisors:
"'Dollar-for-Dollar' Reciprocity between CT and IN Partnership Programs - July 2001"

Summary of Partnership Policy Sales

Policy sales to date indicate steadily growing interest in public/private long-term care insurance policies. Sales also indicate that, when given the opportunity, consumers are willing to protect themselves against the costs of long-term care. For the latest figures on sales in the four funded states see their respective web pages.

Uniform Data Set

Since 1993, partnership states required insurers to report program activity on a regular basis. The four participating states developed a Uniform Data Set to ease the reporting burden on insurers participating in more than one state.

History

Two basic Partnership models were developed, the Total Assets model and the Dollar for Dollar model. Both models have minimum requirements on the amount of coverage that a consumer is required to purchase. The Total Assets model adopted by New York requires that consumers purchase three years of private coverage for the initial period of care, but then does not require any further contribution of the policyholder's assets once the private benefits have been exhausted. A minimum of three years of nursing home and six years of home care coverage, or a combination of the two, is required. After these private benefits are exhausted, none of the policyholder's assets will be considered in the determination of Medicaid eligibility, although the policyholder must contribute his/her income towards the cost of care.

The Dollar for Dollar Partnership model allows consumers to purchase an amount of private coverage equal to the amount of assets that they wish to protect. In general, the minimum policy must cover at least one year in a nursing home. If and when the private insurance benefits are utilized, the amount of private insurance benefits that was piad out for long term care services is disregarded in determining eligibility for Medicaid. As with all Medicaid clients, policyholders who become eligible for Medicaid must contribute their income towards the cost of care under Medicaid. Three states, California, Connecticut, and Indiana, initially adopted this model, but beginning in March 1998 Indiana changed their model to a combination of the Total Assets and the Dollar for Dollar models.

In Indiana, purchasers receive Total Asset protection if they purchase a policy having at least a state-defined amount of coverage ($140,000 in 1998, $147,000 in 1999, $154,350 in 2000 and increasing annually on January 1 for new policies purchased during that year) and Dollar for Dollar protection if the policy has less than that amount of coverage. Policies purchased prior to March 1998 were grandfathered into Total Asset protection if their original maximum policy amount was at least $140,000.

The Partnership programs were implemented in the four states on the dates shown below:

State	Date
Connecticut	March 1992
New York	April 1993
Indiana	May 1993
California	August 1994

Center for Health Policy Research and Ethics