HISTORY OF THE LTC PARTNERSHIP PROGRAM
In the late 1980s the Robert Wood Johnson Foundation supported the development of a new long-term care insurance model, with a goal of encouraging more people to purchase long-term care coverage. The program, called the Partnership for Long-Term Care, brought states and private insurers together to create a new insurance product aimed at moderate-income individuals or those who would be most at risk for future reliance on Medicaid to cover their long-term care needs.
The Partnership program is designed to attract consumers who might not otherwise purchase long-term care insurance. States offer the guarantee that if benefits under a Partnership policy do not sufficiently cover the cost of care, the consumer may qualify for Medicaid under special eligibility rules while retaining a pre-specified amount of assets (income and eligibility rules still apply). Consumers are then protected from having to deplete all their assets in order to qualify for Medicaid.
In the early 1990s, four states implemented Partnership programs: California, Connecticut, Indiana and New York. However, Congress, citing concerns about the appropriateness of using Medicaid funds for this purpose, enacted restrictions on further development of the Partnership in the Omnibus Budget Reconciliation Act (OBRA) of 1993. The four states with existing Partnership programs were allowed to continue, but the OBRA provisions ended the replication in any other state.
The four demonstration states used two models of asset protection. California, Indiana and Connecticut chose a dollar-for-dollar model. In this scenario, the amount of insurance coverage purchased equals the amount of assets protected from consideration if and when the consumer needs to apply for Medicaid. For example, a consumer who bought a policy with a benefit of $100,000 would be entitled to up to $100,000 worth of nursing home or community-based service for long-term care. If further care became necessary, the individual would be able to apply for Medicaid coverage, while still retaining $100,000 worth of assets.
In the total asset protection model, used in the State of New York, consumers were required to buy a more comprehensive benefit package as defined by the state. (Initially, the state mandated that Partnership policies cover three years of nursing home or six years of home-health care.) Consumers purchasing such a policy could protect all of their assets when applying for Medicaid.
In 1998, Indiana switched to a hybrid model, in which consumers could choose between dollar-for-dollar or total asset protection. New York also recently added a dollar-for-dollar option for consumers.
As of 2005, more than 172,000 consumers in the four demonstration states had active Partnership policies, according to the Government Accountability Office. Since the program is fairly young and policies are generally purchased well before they are used, relatively few of the policyholders have actually needed long-term care coverage. However, of those that have accessed their benefits, the Government Accountability Office reports that, "More policyholders have died while receiving long-term care insurance (899 policyholders) than having used up all their long-term care insurance benefits (251 policyholders), which could suggest that the Partnership for Long-Term Care program may be succeeding in eliminating some participants need to access Medicaid."
DEFICIT REDUCTION ACT OF 2005
The Deficit Reduction Act of 2005 (DRA) included a number of reforms related to long-term care services. Of interest to many states is the lifting of the moratorium on Partnership programs. Under the DRA all states can implement Long-Term Care Partnership programs through an approved State Plan Amendment, if specific requirements are met. The DRA requires programs to include certain consumer protections, most notably provisions of the National Association of Insurance Commissioners Model Long-Term Care regulations. The DRA also requires polices to include inflation protection when purchased by a person under age 76 and available to those 76 and older.