Deficit Reduction Omnibus ACT of 2005 Information
In February 2006, the government took another step to help out the Long Term Care insurance industry with the passing of the Deficit Reduction Omnibus ACT of 2005 (DRA). This law makes it more difficult for individuals to qualify for Medicaid. Medicaid has extended its look-back period for all asset transfers from three to five years, and the required spend down requirements must be met before the penalty period. In addition, individuals with home equity of more than $500,000 would be ineligible for Medicaid. The DRA of 2005 also allows for nationwide expansion of the Long Term Care Insurance Partnership Programs.
About Long Term Care Partnership Programs
Long Term Care Partnership policies allow consumers to keep some of their assets that they would most likely have to spend down in order to qualify for Medicaid when needing Long Term Care. Most Partnership programs work on a Dollar-for-Dollar basis: For every benefit dollar that a policy holder uses, they can retain a dollar for their personal assets. For example, if you have a LTC Insurance Partnership policy, and now need to go on Medicaid because you used all of your allotted $100,000 of Long Term Care insurance benefits, $100,000 of your assets will be exempt from Medicaid spend down.
Long Term Care Partnership Programs were originally developed in the 1980's and only four states participated in this: California, Connecticut, Indiana and New York. Partnership Programs were developed to encourage people who might want to turn to Medicaid for their Long Term Care needs to purchase Long Term Care insurance. Partnership policies are just like traditional policies with the exception that it is required that the policies are tax-qualified (most LTC insurance policies sold today are tax-qualified) and some type of inflation is required for those 61 - 75 years of age. Unfortunately, Michigan does not participate in the Partnership Program. Click here for a complete list of states that have approved Long Term Care Partnership Programs and to learn more.
Source: http://www.michigan.gov/documents/meetingnotes_04242006_Documents_171879_7.pdf
