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Medicaid And Long Term Care

How To Combine Long Term Care Insurance And Medicaid

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You can combine Long Term Care Insurance with planning for Medicaid. For instance:

  • Under the federal Qualified State Long Term Care Partnership program you can purchase a Long Term Care policy that allows you to protect your assets while qualifying for Medicaid when the Long Term Care policy runs out. Long Term Care insurance policies used for this purpose are known as "Partnership Policies."
    • The federal program offers dollar-for-dollar protection: for every dollar of coverage that your Long Term Care policy provides, you can keep a dollar in assets that normally would have to be spent in order to qualify for Medicaid. For example, let's say a single person is only allowed to keep $2,000 in assets in order to Medicaid to pay for long term care. If you buy a Long Term Care insurance policy under this program that provides $200,000 in benefits, you are allowed to keep $202,000 (the amount of the benefit plus the amount allowed by Medicaid) and still qualify for Medicaid. In some states, the protection is even greater. For instance, in New York, an unlimited amount of assets can be protected.
    • To be eligible for this program, the policies must be approved by the state and meet certain requirements.
  • You can purchase a Long Term Care insurance policy that covers for 5 years (the Medicaid penalty look-back period). If you go into a nursing home, you can transfer your assets at that point, keeping only enough for expenses during the 5 years, and to qualify for Medicaid at the end of the five years.

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