Long term care insurance can increase the amount of assets you can keep when you qualify for Medicaid.
Long term care insurance can also increase the amount you can protect from estate recovery after you die, if you have been on Medicaid.
This only can happen if you have what is called a Qualified Partnership Policy. These are also known as long term care insurance policies that qualify under the Long Term Care Insurance Qualified Partnership Program
Normally, an individual must spend down to $2,000 in available assets before qualifying for Medicaid.
For a married couple, when one spouse does not need Medicaid, that spouse can also keep up to half of the available assets of the couple, up to a maximum (in 2016), of $119,220. A house can also be kept, so long as one spouse still lives in the house, or one spouse has a subjective intent to return to the house.
These are complex issues. Please see other articles on this web site for more information on spend down, on the concept of “available assets” versus “unavailable assets,” and for issues relating to the home, including the benefit of transferring the home into the name of the well spouse alone, and taking the ill spouse’s name off of the home.
Please note, taking the ill spouse off of the home can be somewhat complicated, and a great many powers of attorney do not give adequate authority for the spouse to transfer the house into his or her own name alone just by using the power of attorney. This may not be obvious when a purported transfer is made using the power of attorney, however. It may become obvious only years later, when the well spouse tries to actually sell the home. You should work with a lawyer who is well qualified in both elder law and real estate law to avoid these issues.
Please see other articles on this web site for more information in these regards.
Returning to the issue of Qualified Partnership Policies, let us say that a person has a Qualified Partnership Policy that pays $50,000 in benefits. A single person who had received this amount of long term care benefits under a Qualified Partnership Policy would be able to qualify for Medicaid when she or he still had $52,000 in cash, rather than having to spend down to only $2,000 in order to qualify for Medicaid benefits.
Please note that a person who receives $50,000 in benefits from a non-qualified long term care insurance policy would NOT get the same treatment, and would still have to spend down to only $2000, in order to qualify for Medicaid.
Similarly, a person who had a house, which was an exempt asset, but was on Medicaid, or a person who had been on Medicaid at one point, but then had received an inheritance, and had gone off of Medicaid, could well still have assets when the person died. Normally, when a person dies, the State of Oregon can recover for amounts paid out by Medicaid during the person’s life. If the person had received $50,000 in benefits from a Long Term Care Qualified Partnership Policy, however, the state would not be able to collect the last $50,000 from this person’s estate, and the money could pass according to the person’s will (or by intestacy, to the person’s heirs at law, if there is no will).
This discussion regarding estate recovery is somewhat simplified, and in some circumstances the state may be able to recover more from an estate than the above example would make it seem. Please see another article that will be published on this web site in the near future for more on this.
Please note, there is nothing magic about the figure $50,000 in the above examples. This is just an example. One could just as well have used the figure $200,000 - and if a person had received $200,000 in benefits from a Long Term Care Insurance Qualified Partnership Policy, the person would be able to qualify for Medicaid while still retaining available assets of $202,000. Similarly, the person could shelter $200,000 from what is sometimes called Medicaid estate recovery after death.
The situation as it applies to married couples is somewhat more complex. As with the estate recovery situation, please see another article that will be published on this web site in the near future for more information on how this would work for married couples.
Please also note, not all long term care insurance policies qualify as Qualified Partnership Policies. There are strict guidelines that must be met. These relate to kinds of care covered, inflation adjustments, and the like. These rules differ from state to state, so a policy that qualifies as a Long Term Care Insurance Qualified Partnership Program policy in some other state may not qualify as a Qualified Partnership Policy in Oregon. The rules may also differ with the age of the protected beneficiary.
You should work with a knowledgeable insurance agent. If your policy qualifies, you should also expect that your insurance carrier will provide a written verification that your policy qualifies under the program in Oregon.
Steven A. Heinrich
Divorce & Custody
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