November 2005 "Indiana Partnership Long Term Care Insurance Policies"
PLANNING FOR WEALTH & SECURITY
By attorneys Jennifer & Jeff Hawkins
Indiana Partnership Long Term Care Insurance Policies
This month and next month, we are republishing excerpts of an article written by Mary Ann Hack, Insight LTCi Services, LLC, who was formerly employed as the Program Director of the Indiana Long Term Care Insurance Program.
What is the “Indiana Partnership?”
The Program name is the Indiana Long Term Care Insurance Program. It is more commonly known as the Indiana Partnership. It is a public private partnership B pairing State government with private long term care insurance companies.
Indiana was the first state in the country to pass enabling legislation for this Program (1987). Indiana is one of four states to have developed this Program B the others are CA, CT, and NY. (Federal legislation, passed in 1993, has inhibited other states from implementing this Program.)
Why was the Indiana Partnership created?
The State saw the population was getting older and living longer, resulting in more individuals who were going to need long term care. The State couldn’t afford to pay for the long term care for everyone (through the Medicaid program). Long term care insurance varied in quality and was difficult to understand.
Who are the Partners?
On the State side, the partners are the Indiana Department of Insurance and Indiana Medicaid. On the private side, the partners are the insurance companies and their agents. Together, the partners created a high quality long term care insurance product that Hoosiers could purchase to finance their future long term care needs. Indiana’s role is to educate the public and monitor the insurance companies. Private Insurance Companies’ role is to develop and market policies and pay claims.
How is an Indiana Partnership LTC policy different from a traditional LTC policy?
• Agents who market these policies must receive additional education prior to marketing them.
• The applicant must have an Indiana address to purchase a policy.
• The policies contain, at no additional cost to the purchaser, the State added benefit of Medicaid Asset Protection. Medicaid Asset Protection is protection from Medicaid spend down requirements, should the policyholder (a) use all the insurance policy benefits and continue to need long term care and (b) then choose to receive Medicaid assistance. The result is the policyholder could receive Indiana Medicaid assistance while retaining assets (instead of having to become poor). Again, after the insurance coverage is exhausted, it is the individual’s choice as to whether to utilize Medicaid assistance or his/her own personal funds.
• The insurance benefits are portable, meaning benefits will be paid for services received in any state. The asset protection benefit is state specific. As a result, at the time the insurance benefits are exhausted and the individual continues to need care, the individual chooses whether to return to Indiana to receive Indiana Medicaid assistance and have his/her asset protection honored; or, remain in a different state and use his/her own funds to pay for care. Exception: There is a reciprocity agreement between Indiana and Connecticut. These two states’ Medicaid programs can honor the asset protection earned under the other states’ Partnership policies. However, asset protection honored under a reciprocal agreement is on a dollar for dollar basis only.
• Participating insurance companies have the requirement of “pooling” their experience should they ever request a rate increase. “Pooling” makes it more difficult for the companies’ to prove the need, to the Indiana Department of Insurance, for a rate increase.
• Premiums paid for Indiana Partnership policies are eligible for an Indiana tax deduction (within federal guidelines).
• When compared to a traditional insurance policy with similar benefits, the price of the Partnership policy is the same. The consumer protection features and asset protection feature do not add to the price.
THIS ARTICLE IS NOT LEGAL ADVICE. ALWAYS CONSULT AN ATTORNEY DIRECTLY BEFORE RELYING UPON THIS ARTICLE OR CHANGING AN ESTATE PLAN.
© 2005 by HAWKINS LAW PC, Estate, Trust & Business Attorneys. All rights reserved. Published with permission.