How Do Private And Federal Long-Term Care Insurance Programs Work?

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William Bridgers
Specialist, LTCi, DI, Annuities, Life, Designs In Life, LLC, Utah
First of all, there is no federal long-term care program. If a person is or becomes "indigent" by state standards, they may qualify to have their long-term care facility expenses paid for by Medicaid (Medical in CA). There is a commission in Washington currently debating if there will be a federal long-term care program, but they will have no power to institute one and it's doubtful that given our current budget deficit, a comprehensive program could be afforded by either the states or the feds (Medicaid is a jointly funded and administered medical program for the poor).Private long-term care programs at this point in time consist of applying to an insurance company and going through full underwriting to determine insurability. If so, they are issued a long-term care policy of insurance. Only insurance agents that are certified to sell long term care (most states) can do so. There is a Partnership long-term care program in 36 states (plus charter Partnership programs still going in CA, CT, NY, and IN). The state departments of health "partner" with the person with a Partnership-approved long-term care plan of insurance so that if they blow through the insurance policy maximum benefits and are still alive, the amount of the payout from the insurance company will increase the impoverishment threshold dollar-for-dollar for that person and if the insured's personal non-exempt assets are lower than what the insurance company has paid out, Medicaid will take over payment of the person's long-term care costs until s/he dies.Note that there are some limitations1. The person needs to be in a facility for full payment of costs by Medicaid. (Home care reimbursement from Medicaid is under $300/mo.)2. A lien in the amount of money paid out by Medicaid is levied against the patient's estate. (This is currently being debated and is a point of contention with some states and consumer groups. Whether it will actually be done is not certain, but it's "on the books".)3. While there is a promise that no discrimination will be made between "Medicaid patients" and "paying patients" in nursing facilities, audits of some facilities have found that there are, in fact, "Medicaid rooms" and regular rooms. When discovered, those facilities are supposedly ordered to make no distinction in treatment, care, or placement of patients based on their ability to pay.At this time, it is clear that there is a looming problem of how to take care of the elderly of the boomer generation as that demographic bubble passes through old age. And, though medical technology allows people to live longer, that life is not necessarily better. No solution has yet been proposed at the federal level. The problem will fall to Medicaid for now. Recent surveys have shown that only about 7-8% of the population owns its own long-term care insurance. Some calculations indicate that Medicaid is solvent for only another 8-10 years as currently administered.
Answered on June 25, 2013
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