FREQUENTLY ASKED QUESTIONS
What is the South Dakota Long-Term Care Partnership Program?
The South Dakota Long-Term Care Partnership Program, administered by the Department of Social Services and Division of Insurance, provides an alternative to spending down or transferring assets by forming a partnership between Medicaid and private long-term care insurers.
What is long-term care? Where is it provided?
Long-term care includes a wide range of services provided to people who need continued help with Activities of Daily Living, such as: bathing, dressing, eating, using the toilet, continence, transferring from a bed to a chair.
Long-term care can be provided in a variety of places, including a person's home, an assisted living facility or a nursing home.
What is the risk of needing long-term care?
Everyone is potentially at risk. Studies have found that 69 percent of people turning 65 years of age will need some form of long-term care before they die. Among those turning 65 years of age, 52 percent will need long-term care for at least one year before they die and 20 percent will need five years of care of more.
What is the cost of long-term care?
The average private pay rate for a semi-private room in a South Dakota nursing home in 2012 is $182 a day, or over $66,600 per year. The average cost for a day in a South Dakota nursing home has increased annually.
The average length of stay is 2.5 years, bringing the cost of an average stay to $166,500. Home care can be just as expensive, depending on the frequency and services required.
Doesn't Medicare cover the cost of long-term care?
Many assume Medicare will pay for their long-term care expenses. Medicare covers only a small portion of the country's long-term care costs. Medicare will pay for care in a nursing home only when certain conditions are met, and even then, you are only fully covered for 20 days. In certain situations, some people qualify for partial payment up to 100 days.
What does Medicare cover when it comes to long-term care?
Medicare, a federal program providing health insurance for individuals 65 and older or individuals with disabilities, has specific rules that apply for payment of nursing home care. Medicare requires a 3-day hospital stay prior to transferring to a nursing home. Services received in a nursing home must relate to the illness or injury that caused the hospitalization. Medicare coverage for nursing home care ends once an individual's needs change from skilled care to custodial care.
What is Medicaid and Title XIX?
Medicaid and Title XIX are the same program. It is a program administered by the State of South Dakota to provide health care for low income individuals, families and children. Medicaid covers close to half of the nation's long-term care bill.
In addition, individuals must meet certain eligibility and income criteria before they receive benefits from Medicaid.
Who can I contact for more information on South Dakota Medicaid?
What do Partnership policies provide?
- For a person who is less than 61 years of age as of the date of purchase, the policy provides compound annual inflation protection. This is one of the distinguishing features of a Partnership policy and also the inflation protection is a valuable benefit regardless of whether the policy is a Partnership policy that may not be less than 3 percent per year or a rate equal to the Consumer Price Index. .
- For a person who is at least 61 years of age, but less than 76 years of age, the policy provides some level of inflation protection
- Some Partnership policies cover home and community-based services. Individuals should consider looking into a policy that pays for these types of services.
- Agents who wish to sell long-term care insurance and Partnership policies must complete 8 hours of training initially and then 4 more hours every other year thereafter. Learn more about agent training and which companies have approved courses.
- Only Partnership policies provide Medicaid asset protection.
- All Partnership policies are tax qualified plans under federal tax law.
Does a Partnership policy cost more than a regular long-term care insurance policy?
Partnership and other long-term care insurance policies with the same benefits and from the same company will likely have identical premiums.
Depending on your age, Partnership policies may include automatic inflation protection at 3 percent (or higher) compounded annually and may also offer home and community-based services. If a regular long-term care insurance policy does not include these benefits, there will be a significant difference in the premiums. As you compare policies, make sure you also compare the benefits.
The Medicaid asset protection feature does not add to the cost of a Partnership policy. Only Partnership policies include Medicaid asset protection.
How does Medicaid asset protection work?
The greatest and most unique benefit of a Partnership policy is the Medicaid asset protection. The difference between a Partnership policy and a non-Partnership policy is the Medicaid asset protection.
This feature provides dollar for dollar asset protection: for every dollar that a Partnership policy pays out in benefits, a dollar of assets can be protected from the long-term care Medicaid resource limit. When determining long-term care Medicaid eligibility, any assets you have up to the amount the Partnership policy paid in benefits will be disregarded.
For example, if your Partnership policy paid $200,000 in benefits, South Dakota's Medicaid program would allow you to keep $200,000 in assets and still qualify for Medicaid assistance. The amount of assets you are able to protect under the Partnership is in addition to the $2,000 everyone is allowed to keep, including any assets your spouse may be allowed to retain.
How do I know if purchasing a long-term care insurance policy is right for me?
For some, a long-term care policy is an affordable and attractive form of insurance. However, long-term care insurance policies may not be the best option for all South Dakotans and you should think carefully before purchasing one.
Carefully evaluate your needs and resources to decide whether long-term care insurance is appropriate. There are many decisions to be made and concerns to discuss with your family and financial advisor, so others are aware of your care needs.
What are some considerations to think about before purchasing a long-term care insurance policy?
While there are a number of different things to consider and evaluate on which policy is the best to buy, here are some questions to keep in mind:
- What is the minimum benefit of the policy?
- How long is the elimination period? The elimination period is the number of days paid out-of-pocket before the policy begins to pay.
- Is the policy tax qualified? All Partnership policies are tax qualified.
- Does the policy provide for home care or adult day services?
Why should anyone consider purchasing a Partnership policy?
- Medicare covers only a small portion of nursing home and other long-term care costs.
- The average annual cost of a nursing home in South Dakota is over $66,600.
- There are strict rules and penalties for transferring assets to qualify for Medicaid.
- The Partnership program will allow individuals to keep additional assets and qualify for Medicaid.
- You choose where you receive the care, whether it be in a nursing home, or in your home, giving you and your family peace of mind if you should need long-term care.
What is annual inflation protection?
Under the Partnership, the premium stays level and does not automatically increase even though the benefits increase on an annual basis. However, it is possible that an annual premium increase could be implemented by the insurance company affecting all like policyholders.
- Consideration should be given to include automatic inflation protection. A policy paying out $100/day could be worth less 20-30 years from now if the benefits were not inflated. If the benefits were not inflated for each year, you could have a substantial out-of-pocket expense to make up the difference between the actual charge and what the insurance policy will pay.
How will I know how much long-term care insurance to buy?
In order to determine how much LTC insurance you will need, the general rule is Cost of Care - Income = Benefit Amount.
If monthly cost of care is estimated at $4,500 and your anticipated monthly income is equal to $1,500, you would want to purchase a policy with a $100 per day benefit.
- $4,500 - $1,500 = $3,000/month
- $3,000/month divided by 30 = $100 daily benefit
Are premiums for a long-term care insurance policy expensive?
The cost for long-term care insurance varies by the age, marital and health status of the applicant, as well as the level of coverage purchased and even the state of residence, according to the American Association for Long-Term Care Insurance. The premium you are charged can vary significantly from company to company and will also vary depending on the benefit options you choose.
What factors contribute to the cost of a long-term care insurance policy?
Each company sets its own rates. Talking with your local agent will provide you with the much needed information you will need when it comes to specific rates and premiums. Premiums can vary greatly across companies and within companies depending on what features are included in your policy.
The following factors will have a direct impact on the amount of premium you will pay:
Age is the single most important factor because the younger you are, the less expensive your premium will be.
- Inflation Protection:
Inflation protection increases your daily benefit and will increase the premium. This is one of the distinguishing features of a Partnership policy and also the inflation protection is a valuable benefit regardless of whether the policy is a Partnership policy.
- Elimination Period:
The shorter the elimination period, the more expensive your premium will be. This period is similar to a waiting period.
- Lifetime Benefit:
The greater the benefit purchased, the more expensive the premium will be.
- Riders or Options:
Additional features, such as a non-forfeiture benefit, will increase the premium.
- Spousal Discounts:
Most companies will provide for some discount if both spouses purchase a policy from the same company.
- Group Discounts:
Purchasing a policy through a group, such as your employer, may decrease the premium.
- Paid Up Options:
Premiums can also be paid up within a specific period (e.g., 10 or 20 years) of time, in which case the annual premium for the specified period is higher than the annual premium would be if it was paid for the lifetime of the policyholder or until they need care.
- Health Factors:
Some companies offer lower premiums for applicants with good health and higher premiums for applicants with certain health conditions.
- Daily, Monthly:
Partnership plans have a minimum coverage of $100 per day or $3000 per month. More coverage is available.
What is the age limit for purchasing a Partnership policy?
There is no set age requirement for someone who is interested in purchasing a Partnership policy. Typically, companies will sell a Partnership policy to someone who is between the ages of 40 and 84. There are many companies who will sell to individuals as young as 18.
Who can purchase a Partnership policy?
The younger you are when purchasing a long-term care insurance policy, the less expensive it is. If you have accumulated resources by saving, investing, or other, you may be the best candidate for a Partnership policy.
How can I purchase a Partnership policy?
Before purchasing a Partnership policy, you may want to consult with a trusted advisor or long-term care insurance agent so you are able to pick a long-term care product that is right for you. If you want to buy a Partnership policy, please contact your local agent or an insurance company that is approved to sell Partnership policies. Some employers may also offer long-term care insurance policies.
Currently, Partnership policies are available from the participating insurance companies which are authorized by the South Dakota Division of Insurance to market and sell these policies. The State of South Dakota does not sell Partnership policies, they administer and monitor the Long-Term Care Partnership Program.
The companies who sell partnership plans are listed on the Division of Insurance website.
Do insurance agents have to go through training before they can sell a Long-Term Care Partnership policy?
Yes. Agents who wish to sell long-term care insurance and/or Partnership policies must complete 8 hours of training initially and then 4 more hours every other year thereafter. Learn more about agent training and which companies have approved courses.
How will I recognize a Partnership policy?
A policy, certificate, or contract designed or marketed as a Long-Term Care Partnership policy must prominently disclose on the schedule page and include the following:
- The [policy, certificate, or contract] is intended to meet the standards for the long-term care partnership program in this state;
- Nothing in this [policy, certificate, or contract] is a guarantee of Medicaid eligibility nor is it a guarantee of any ability to disregard assets for purposes of Medicaid eligibility. This notice is required by the State of South Dakota.
What if I already have a long-term care insurance policy?
Individuals with existing long-term care policies may be able to exchange their current policies for Long-Term Care Partnership policies through a rider, endorsement, or change in schedule page as long as the policy meets the core requirements for a Partnership policy. While the South Dakota Long-Term Care Partnership Program allows for the exchange of policies, it is up to each insurer if they offer exchanges.
Will my Partnership policy premium increase every year?
Premiums may remain level for the duration of the policy. Your premium can increase if the company increases premiums for everyone who has the same policy and receives approval for the increase from the South Dakota Division of Insurance.
What happens if I can no longer afford to pay the premiums for the policy?
Effective July 2, 2007:
Companies must offer people who are about to lapse their policies the option to reduce their lifetime maximum benefits, or other policy benefits and therefore, reducing their premium. If you still cannot afford to pay the premium of a reduced benefit offer, then, as with any insurance, you would have to drop the policy unless it contains a non-forfeiture option. If you have purchased a non-forfeiture option as part of your policy, it may be possible to receive reduced benefits without having to continue paying premiums. A non-forfeiture option must be offered to all applicants for long-term care insurance.
Prior to July 2, 2007:
Companies may or may not offer the above stated option.
What happens if I accidentally miss a monthly premium payment on my policy?
Applicants and policyholders should take full advantage of the option to designate someone to receive lapse notices. This provides you with an extra layer of protection should you accidentally miss a premium payment. Premiums can be easily missed when you change addresses, have an extended absence or in the event of a serious injury or illness. Having someone designated to receive a notice will help prevent any unwanted cancellation of coverage.
Will South Dakota Medicaid try to recover my protected assets after I die?
No. The Estate Recovery Program will not recover the amount of assets disregarded for the individual receiving the partnership benefit when Medicaid eligibility was determined, less the amount of any disregarded assets that were disposed of prior to the individual's death.
The Department of Social Services administers the Estate Recovery Program, which files claims against the estates of deceased Medicaid recipients. This helps the Department recover the cost of Medicaid benefits it has provided to those recipients.
The Department is authorized to recover the cost of benefits provided to recipients for the following services:
- Nursing home services (for all recipients)
- Home and community-based services (for recipients 55 years of age and older)
- Intermediate care facility services for the mentally handicapped (for all recipients)
- Other institutional services (for all recipients)
- Hospital services (for all recipients)
- Prescription drug services (for recipients 55 years of age and older)
Do I have to use up all of my Partnership policy before I can apply or become eligible for South Dakota Medicaid?
If you have a Long-Term Care Partnership policy, you do not have to use up all of the benefits of the policy before applying for South Dakota Medicaid, but you will only receive dollar for dollar disregard of the benefits received up to the point of application.
Can I be denied long-term care insurance if I have a pre-existing medical disorder or condition?
If you have a serious medical disorder or condition, or a disease such as Alzheimer's disease, at the time of your application, many companies may not approve your application. If for some reason you would happen to develop a serious medical disorder or condition after being approved and purchasing the policy, the company cannot cancel the policy on that basis. Some group plans will accept applicants regardless of health status.
What if my employer does not offer long-term care benefits?
There are many insurance companies offering long-term care on an individual basis. Contact you local agent on the choices available to you.
- List of participating insurers who are approved to sell LTC Partnership plans.
- List of insurance companies in your area.
Who can I contact for more information?