The Advisor's View of Long-Term Care Planning

Partnership LTC Plans - are they worth it?

Posted by LTCI Partners | Mar 19, 2014 3:47:00 PM

Partnership LTC plans are a great concept. Americans who decide to take responsibility by purchasing LTC Insurance can have the amount of the LTC benefit paid "disregarded" if they need to apply for Medicaid and access state LTC programs. Partnership programs were created to help the middle class, not the wealthy who will not qualify for Medicaid.

With carriers no longer offering unlimited benefit periods, having a partnership provision can address a concern of policy holders of exhausting their benefits and still having to "spend down" to be on Medicaid. This creates peace of mind, even through there have actually been very few policyholders who have exhausted their benefits with Partnership plans.

So what's the downside to Partnership plans?  The problem is required minimum coverages in order to qualify for Partnership plans often mean the products become unaffordable to the very middle class they were designed for.  For example, with New York Partnership you'll find the premiums for a 55-year-old couple around $6300 per year for a max daily benefit of $280 and a benefit pool of $306,600.  On the other hand, if you used the same premium to buy LTC coverage with no automatic inflation coverage you could get $400 of max daily benefit and a total benefit pool of $876,000.

Most people won't want to spend that type of annual premium for LTC, however. Partnerships should change their regulations to allow all policyholders to benefit from Partnership asset protection, regardless of the inflation coverage they purchase.

Topics: For financial professionals

Written by LTCI Partners

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