Long-Term Care Partnership Plans Explained | SafeMoney

By Brent Meyer — SafeMoney.com Founder & Editor Reviewed by Licensed Financial Professionals  |  SafeMoney.com — Trusted Since 2011  |  Updated Regularly Quick Answer: Partnership LTC plans protect assets from Medicaid spend-down. Learn how dollar-for-dollar asset disregard works and who benefits most. What Is a Long-Term Care Partnership Plan? A long-term care partnership plan is a special category of state-approved long-term care insurance that comes with a powerful additional benefit: dollar-for-dollar asset protection if you later apply for Medicaid. For middle-class and upper-middle-class Americans who have spent their lives building savings, partnership plans offer a way to protect a portion — or all — of those assets from Medicaid spend-down requirements while still receiving professional long-term care without depleting the family estate. Partnership plans are sold by private insurance carriers that have received state approval to participate in the program. They meet specific minimum benefit and quality standards set by state regulators, and they include the critical "partnership" feature that links private LTC benefits to Medicaid asset protection. How the Medicaid Asset Disregard Works To understand the value of a partnership plan, it helps to understand what Medicaid normally requires. In most states, an individual must reduce countable assets to approximately $2,000 before qualifying for Medicaid-funded nursing home care. A married couple has somewhat more protection — the healthy "community spouse" can typically retain assets within a defined limit — but even so, most of a couple's retirement savings must be spent before Medicaid begins covering care costs. A partnership plan changes this equation through the asset disregard provision : for every dollar your partnership LTC policy pays in benefits, Medicaid will disregard (protect) one dollar of your assets from the spend-down requirement if you ever apply for Medicaid coverage. Here is a concrete example: You purchase a partnership LTC policy with a $200,000 benefit pool You need care for 3 years; the policy pays $200,000 in benefits over that period Your policy benefits are exhausted; care costs continue You apply for Medicaid — but because your policy paid $200,000 in benefits, Medicaid disregards $200,000 of your countable assets If you have $250,000 in savings, you could qualify for Medicaid while retaining $200,000 — rather than spending down to $2,000 In states