Have you ever dreamed about what life will be like post-retirement? Do you picture yourself wintering on a Caribbean beach? Crossing the country in an RV? Paying for a daughter’s lavish wedding? One way to ensure your dreams don’t die is by protecting your retirement savings from an unexpected long-term care event. A good way to do that is sign up for the federally supported Long-Term Care Partnership Program in your state.
When a Million Dollars in Savings Was a Big Deal
I had a friend back in the ‘90s who had recently divorced and was starting over on her own. She’d met with a financial planner at her workplace to chart her new course. He’d told her what it would take for her to have a million dollar nest egg by retirement age.
Imagine. A millionaire retired teacher. She was over the moon with excitement. She was also that determined kind of person who did whatever it took to make her millionaire dreams reality. We’ve lost track of each other over the years, but as she approaches retirement, I wonder if she made it.
She couldn’t have anticipated what a million dollar retirement looks like now. It turns out that it may not be enough to retire on, depending on where you live. In fact, financial planners sometimes refer to it as “million-dollar poverty.” The same thirty-something person today who plans to retire at 67 with a cool million will be below the poverty line.
Still, if you manage to save a million dollars for retirement, you’re ahead of most people. You’ll need every dollar of savings to live comfortably if you retire today. And that’s if you remain healthy for the next 25 years.
Statistically, 70% of us will need some level of long-term care after retirement. That puts your retirement savings at risk unless you put counter measures in place.
What is the Long-term Care Partnership Program?
To really appreciate the Long-term Care Partnership Program, you have to first understand Medicaid rules. For Medicaid long-term care, you need to have qualifying care needs and limited assets and income. People with substantial savings and assets historically “spent down” to qualify for Medicaid. Here’s an in-depth article on the rules, limits, and exemptions of Medicaid spend down for further explanation.
The LTC Partnership Program is a state-operated program with Federal government support. You buy a qualifying long-term care policy, and it protects your money and other assets from the Medicaid spend-down rule.
Attorney Dennis Duncan explains Medicaid spend-down.
How Does the Long-term Care Partnership Program Work?
Back in the 1980s, states were already feeling the pinch that long-term care was putting on Medicaid. So, the federal government’s answer was to incentivize private long-term care insurance for those who didn’t qualify for Medicaid.
You could protect your assets up to a predefined amount of your policy’s benefits. Used policy benefits wouldn’t count toward Medicaid eligibility, and an amount equal to the used benefits wouldn’t be part of the Medicaid spend-down either. But, you could only take advantage of the program if you lived in New York, California, Indiana, or Connecticut.
Over the decades, Medicaid was increasingly feeling the squeeze of long-term care as people lived longer and needed more care. The 2005 Federal Deficit Reduction Act (DRA) kicked in in February 2006. Now, any state that wanted to be part of the Long-term Care Insurance Partnership Program could do it. The program allows people in participating states to get dollar for dollar asset protection up to the policy’s maximum benefits payout.
To protect consumers, companies offering Partnership policies have to be certified that their policies qualify for the Partnership program. They have to meet stiff consumer protection standards, along with particular inflation requirements. Anyone with one of these Partnership Program policies qualifies for asset protection dollar-for-dollar up to the policy’s maximum.
What Your Partnership-Qualified LTCI Policy Could Look Like
Let’s say you bought a partnership-qualified long-term care policy that paid out $200,000 in benefits. You can protect $200,000 of your personal assets, plus the Medicaid eligibility amount you get to keep, and still qualify for Medicaid. Now you can pass on that $200,000 of assets to your heirs, even though you’re on Medicaid. This amount is also protected from Medicaid state asset recovery efforts after your death.
Which States Participate in the Partnership Program?
Partnership Program states are in blue.
Capital Retention provides certified Partnership-qualified long-term care insurance policies in all participating states.
Simply complete the contact form on our website while you’re thinking about it. Or, you can call 844 805 3557 to pre-qualify over the phone.
Live your dream retirement while protecting your savings from the exorbitant costs of long-term care. It’s a win for both you, and your heirs.
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