Virginia Long-Term Care Insurance Partnership
The Virginia Long-Term Care (LTC) Partnership is designed to reward Virginians who plan ahead for future long-term care needs. With the Partnership's Dollar-For-Dollar Asset Protection, Virginians can protect personal assets if there is a need to apply for Medicaid.
This innovative alliance between private insurance companies and the state government will protect Virginians from depleting all of their savings and assets to pay for long-term care.
The future demand for long-term care services is expected to rise. Virginians need to plan ahead to ensure that the widest array and highest quality of services will be available to them. The Virginia LTC Partnership is here to help.
The Virginia LTC Partnership Policy
Virginia LTC Partnership Policies and non-Partnership LTC insurance policies are similar. Partnership Policies have the added benefit of allowing policyholders to protect a portion of their assets if they choose to apply for Medicaid.
- Dollar-For-Dollar Asset Protection
- Dollar-For-Dollar asset protection for every dollar that a LTC Partnership Policy pays out in benefits, a dollar of assets can be protected for purposes of determining Medicaid eligibility. Therefore, if you receive $100,000 in benefits, you may then apply to Virginia's Medicaid program for assistance and still keep $100,000 in assets (in addition to the $2,000 everyone is allowed to keep and any other asset allowances under Medicaid). This Dollar-For-Dollar Asset Protection feature is not available under non-Partnership Policies.
- Annual Compound Inflation Protection
- Annual compound inflation protection is required in Partnership Policies issued to individuals under age 61 and some level of inflation protection is required in Partnership Policies issued to individuals age 61–76. Individuals age 76 and older at the time of purchase are encouraged, but not required to obtain inflation protection. Inflation protection helps to adjust the policy's benefits to keep up with the rising cost of long-term care services.
- Grandfathered Policies
- No existing LTC policies will be "grandfathered" into the program. Current LTC policyholders who wish to obtain a Partnership Policy should contact their insurance agent or broker.
- Partnership Policy Issue Date
- All Partnership Policies must be issued after the program start date of September 1, 2007.
- Agent Training
- Those who sell Partnership Policies must take a training course that is approved by state officials.
The VA LTC Partnership is a joint effort between the Bureau of Insurance, the Virginia Department of Medical Assistance Services, Virginia Department for the Aging, and private insurance companies.
How Do Partnership Policies Work?
The amount of the Dollar-For-Dollar Asset Protection is calculated based on:
- The amount of benefits paid by the LTC insurance company on the policyholder's behalf.
- It is not necessarily equal to the amount of the premiums paid or the maximum benefit.
LTC Partnership—Dollar-For-Dollar Scenarios
Following are a few examples of how the Virginia LTC Partnership works (please note that amounts used in these examples are for illustration purposes only):
- Scenario 1
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A policyholder utilizes $100,000 in LTC Partnership insurance benefits and has $100,000 in additional assets.
He or she applies to the Medicaid program for assistance and DMAS disregards dollar-for-dollar the amount that the insurance policy paid (in this case $100,000) from his or her assets during the Medicaid eligibility determination process.
- Scenario 2
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A policyholder utilizes $100,000 in LTC Partnership insurance benefits, but he or she has $300,000 in assets.
The policyholder could be eligible for Medicaid when he or she reduces her assets to $102,000 ($100,000 in excluded assets plus the $2,000 Medicaid resource limit available to all Medicaid applicants).
- Scenario 3
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This case is a bit tricky. In this example the LTC insurance policy does not cover the entire cost of care per day.
So, the policyholder must use her own assets to subsidize the LTC insurance policy in order to afford care. The policyholder decreases assets by subsidizing her cost of care. As time goes by, the policyholder decreases her assets and accrues insurance benefits paid on her behalf (e.g. $50,000 of insurance benefits paid and $50,000 in assets remaining).
The policyholder could be eligible for Medicaid since all of her remaining assets would be excludable.
In this scenario, the policyholder is eligible for Medicaid before exhausting the LTC insurance benefit. The policyholder could receive all the Medicaid services covered in the state plan, but the LTC insurance policy would continue to pay for long-term care until the policy is exhausted.