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Thursday, Jun. 1st 2017

Kansas Partnership for Long-Term Care

A while back, I wrote a piece on the Kansas Partnership for Long-Term Care and how it works with qualified long-term care insurance policies. My primary source for this article is on the Kansas Insurance Commissioner’s web site at www.partnershipforlong-termcare.com/Kansas-partnership/

 A lot of folks have questions about how Medicaid works so here is a quick overview of the Kansas Partnership for Long Term Care. Now as you may recall, Medicaid will only pay for long term care if we are broke. Now In order to reduce the growing cost of Medicaid, the state of Kansas created the Partnership for Long-Term Care in order to encourage individuals to purchase long-term care insurance. The “program makes the purchase of long-term care insurance more meaningful by linking… (these partnership qualified policies) with Medicaid for those who continue to require (long-term) care”. Further, it protects individuals from having to go broke before they qualify for Medicaid.

 Here is how it works. Normally to qualify for Medicaid, you have to spend down your assets to less than $2000. If you’re a married couple you can go visit attorney and do a division of assets. Then the spouse that remains at home will have a limit on assets and the spouse requiring long term care will have to spend down their assets to less than $2000. If down the road, the at-home spouse also requires Medicaid; that spouse would also have to spend down their assets below the $2000 threshold. Once both spouses pass on, the state would seek to recover the amount spent on both spouses, typically by placing a lien on the sale of their home and property.

Let’s assume that both spouses purchased partnership qualified long-term care insurance policies. That means that the policies complied with State guidance on specific consumer protections, to include inflation protection. So let’s say that dad uses up all his benefits on his long-term care policy. Under the Kansas Partnership for Long-Term Care, an individual can apply for Medicaid under modified eligibility rules using a special feature called asset disregard. The amount of assets that Medicaid will disregard is equal to the total amount of benefits your long-term care partnership policy paid out.

The following is an example of how a Kansas Partnership for Long-Term Care Qualified policy works, except for the name change; it tracks with the example of the Kansas web site. Let’s say dad purchases a Kansas Partnership for Long-Term Care policy with a total benefit of $200,000. Some years later he needs long term care and receives benefits under that policy up to the policy’s lifetime maximum coverage (adjusted for inflation) now equaling $250,000. Dad uses his entire total benefit amount and requires more long-term care services. He applies for Medicaid. If dad’s policy was not a Partnership-qualified policy, in order to qualify for Medicaid, he would be entitled to keep only $2,000 in assets. He would have to spend down any assets over and above this amount. However, because dad bought a Partnership-qualified policy, if he needs to apply for Medicaid and is deemed eligible, he can keep $252,000 in assets and the State will not seek to recover those funds after his death. However, any assets dad has over and above the $252,000 would have to spend down order for him to be eligible for Medicaid. The same process would apply for mom, if she were to purchase a policy.

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