Be careful where you retire. Not all Partnership programs are equal.

In an effort to encourage more people to purchase long-term care insurance, the Deficit Reduction Act of 2005 (DRA) created the Qualified State Long Term Care Partnership program. The program offers special long-term care policies that allow buyers to protect assets and still qualify for Medicaid when the long-term care policy runs out. If your LTC policy qualifies for this program it essentially doubles the amount of possible protection from that LTC policy; you not only receive the policy payout to cover the cost of your care, but you also avoid having those assets count against your estate if your policy runs out and you have to apply for LTC through Medicaid. Because these programs run through the state government, it is critical to consider where you intend to retire. Not all states have this program, and even some that do will not honor a policy sold in a different Partnership Qualified state. For instance, these eight states have no Partnership LTC program: New Mexico, Alaska, Hawaii, Mississippi, Illinois, Michigan, Vermont, and Massachusetts.  Not only do they not have the program, they also will not honor a Partnership qualified LTC policy sold in another state if you move there and apply for Medicaid LTC services. California has a Partnership program but doesn’t have reciprocity with other states and will not honor a policy from another Partnership state. All the other states have Partnership programs and have reciprocity with other Partnership states and will honor qualifying policies sold in those states. It is possible that the states listed above without Partnership LTC programs could develop them in the future.  As always things change in the government on a state and federal level frequently. Part of our job here at Winch Financial is to keep up with those changes to give the best advice our clients.  If you have a LTC policy that qualifies for the Partnership program in the state you… | Read More »