Here’s a New Idea for Buying Long-Term Care Insurance

Many middle-income people have too much money to qualify for Medicaid, but can’t afford a pricey long-term care insurance policy. In an effort to encourage more people to buy long-term care insurance, Congress created something called the “Qualified State Long-Term Care Partnership” program. In states that offer the program, you can buy special long-term care policies that allow you to protect your assets and still qualify for Medicaid when the long-term care policy runs out.

Here’s how it works: You buy a long-term care policy that is sold by a private company but that has been approved by the state under the program. The policy will cover at least some of your long-term care needs. If the policy runs out and you need to go on Medicaid, you can keep more of your assets than the $2,000 that Medicaid normally allows.

In most states, it’s a dollar-for-dollar benefit – for every dollar of coverage that the long-term care policy provides, you can keep a dollar in assets that normally would have to be spent down to qualify for Medicaid.

So if you buy a long-term care policy that provides $150,000 in benefits, you would be allowed to keep $152,000 in assets and still qualify for Medicaid. (Keep in mind that the exact details vary from state to state.)

Some states go even further. In New York, for instance, if you buy a policy that covers three years of nursing home care or six years of home care, then once you’ve exhausted the policy benefits, you can qualify for Medicaid with no limit whatsoever on the amount of your assets.

Keep in mind, though, that in order to obtain the Medicaid protection, you have to receive your long-term care in the same state where you bought the policy, or in another state that has a reciprocal agreement with the state where you bought the policy.

More information on this program (and on long-term care insurance in general) can be found at the National Clearinghouse for Long-Term Care Information at www.longtermcare.gov.