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If you are considering a long-term care insurance (LTCI) plan to protect your asset from the high cost of long-term health care, you owe it to yourself to understand the magic sauce of a partnership-qualified plan. So, what states offer them and what are they? Currently, only nine states do not have a partnership plan in place. The list includes Alaska, Hawaii, Illinois, Maryland, Michigan, Mississippi, New Mexico, Utah and Vermont.
Partnership approved plans are designated as tax-qualified and require a minimum level of benefits to be in the plan. To find out your states qualifications, simply visit your state’s Division of Insurance website. It’s that easy. All LTCI agents or advisors must complete a special training program to offer LTCI plans in their state. Partnership approved states require this training to ensure each agent/advisor understands LTCI plans and how to correctly design the plans to qualify for the partnership standards.
I recommend when you are researching the market and getting quotes for coverage, you specifically request a partnership approved plan. Any experienced and trusted advisor you work with should be automatically recommending coverage that satisfies the partnership standards; however, it’s always safe to ask. In my opinion, there is no extra cost of having a partnership plan and the benefits are tremendous.
In another article, I talk about legacy planning and planners. Well, if you are this type of person, you’re going to really like what you’re about to read. Partnership-qualified plans allow you to protect the same amount of personal liquid assets that you would receive from your LTCI plan from Medicaid spend down. Confusing? It’s really not.
Generally speaking, most of us understand that in order to qualify for Medicaid you cannot have more than $2000 of personal assets, not including your primary home or vehicle, and you can only retain $750K of home equity. Additionally, you will be required to submit your previous five years financial records to prove you have not gifted assets away to impoverish yourself. This makes it very difficult for many families to qualify for Medicaid.
Now for the magic sauce! If you own a partnership-qualified LTCI plan you can protect a significant portion, if not all of your assets, from Medicaid spend down. This allows you to pass more of your assets on to your healthy spouse, children, grandchildren, favorite church, or charity. Here’s how it works: For every dollar you receive from your LTCI plan, you can protect a dollar of your own personal liquid assets from spend down. Here’s an example: Let’s say you exhausted your LTCI plan after receiving $350K in paid benefits to you from your LTCI plan and still needed care, you could qualify for Medicaid and you are allowed to shield and retain the same $350K of personal assets for the benefit of your healthy spouse, family, church or charity. In my opinion, this truly doubles the amount of asset protection in your LTCI plan. That’s the magic sauce, and you don’t pay any extra for it.
I believe this is an incredible benefit for families. Families are now able to pass more assets to their heirs, which is very important in today’s economic situation. Young families need both parents working to make ends meet and are having more difficulty meeting their own savings goals. Rather than spending a family’s life savings on long-term health care and giving it away to the owner or corporation of a long-term health care facility, help your families. A gift in the form of a financial legacy can be an incredible gift to your own family. A partnership-qualified plan ensures you are able to pass more, rather than less, to your family if you need help with long-term health care needs.
If you would like to talk more visit us at http://solidwealthadvisors.com/contact-us/