Texas Long-Term Care

Texas created the Long-Term Care Partnership Program as an incentive for Texans to plan for their long-term care needs. The partnership is a joint effort between private insurers and the state. Insurers must follow state and federal guidelines to sell partnership policies.

Partnership policies have an asset disregard benefit that is useful if you deplete your insurance benefits and need to apply for Medicaid. Partnership policies, however, do not guarantee you´ll be accepted into Medicaid. You´ll still have to meet income, medical, and other eligibility criteria.

With the asset disregard benefit, every dollar of long-term care benefits your partnership policy pays will equal one dollar of countable assets that will be disregarded to determine if you´re eligible for Medicaid. This means you can retain assets above the normal limit and you won´t need to "spend down" your assets to qualify for Medicaid. In addition, the assets that were disregarded in the Medicaid eligibility process will not be subject to Medicaid liens and recoveries after you die.

In addition to asset disregard, long-term care partnership policies must also include the following benefits:

Inflation protection. Inflation protection helps your policy continue to pay long-term care benefits as costs rise. Partnership policies provide varying levels of inflation protection based on your age:

• Under 61 years old: The insurer is required to offer you the option to purchase and retain 5 percent compound annual inflation protection but you can choose to purchase protection at a lower rate. Upon attaining 61 years of age, you can amend the inflation protection provision to comply with requirements of the next age bracket.
• Ages 61 to 76: You must purchase and retain some form of inflation protection until you are 76 years old.
• After age 76: Insurers must offer inflation protection, but you don´t have to purchase or retain it.

Tax qualification. You may be able to deduct part of the premium from your taxes as a medical expense, and policy benefits are generally not taxable as income.

If you´re considering a long-term care policy, ask your insurance company or agent if a partnership policy meets your needs. If you purchased a long-term care policy on or after February 8, 2006, ask your agent about exchanging your policy for a partnership policy. The insurance company is required to certify that each agent who sells partnership policies or certificates complies with the training requirements.

Note: Partnership policies will be accompanies by a disclosure statement identifying the policy as a long-term care partnership policy. Be aware that if you make any changes to your partnership policy, you could lose your partnership policy status. Your agent can tell you what changes will result in a status change.

Don P. Baker Financial Group can help you with all of your insurance needs.