Developing a Longterm Care Partnership in Virginia

1
Developing a Long-term Care Partnership in
Virginia

• Virginia Department of Medical Assistance
  Services
• February 2007

2
Long-term Care Partnerships

• Long-Term Care (LTC) Partnerships are
  public-private ventures to address the financing
  responsibility of LTC.
• Partnerships are designed to encourage
  individuals to purchase private LTC insurance in
  order to fund their LTC needs, rather than
  relying on Medicaid to do so.
• LTC Partnerships combine private LTC insurance
  with special access to Medicaid for individuals
  who exhaust their LTC insurance benefits.

3
Long-term Care Partnerships

• Two main benefits Protection of assets during
  Medicaid eligibility determination and during
  estate recovery.
• Several states developed LTC Partnerships in the
  1980s, however in the 1990s laws were changed
  that removed the estate recovery disregards,
  thereby rendering LTC Partnerships worthless.
• LTC Partnerships in four states, however, were
  grand-fathered and not subjected to the changed
  estate recovery provisions (California,
  Connecticut, Indiana, and New York).

4
History of LTC Partnerships

• The Deficit Reduction Act of 2005 (DRA) lifted
  the moratorium on estate recovery disregards and
  encouraged new development of LTC Partnerships.
• After the DRA, many states, including Virginia
  became interested in LTC Partnerships as a way to
  curb increasing growth in LTC expenditures for
  Medicaid participants.
• In 2004, Senate Bill 266 (Edwards) amended the
  Code of Virginia for the development of a LTC
  Partnership and in 2006, House Bill 759
  (Hamilton) further amended 32.1-325 of the Code
  specifically directing the Department of Medical
  Services to implement a LTC Partnership.

5
How Do LTC Partnerships Work?

• LTC Partnerships encourage citizens to purchase a
  limited, and therefore more affordable amount of
  LTC insurance coverage.
• LTC Partnerships provide consumers with the
  assurance that they could receive additional LTC
  services through Medicaid without having to
  reduce their assets to the 2,000 Medicaid asset
  limit (which is required in order to meet
  Medicaid eligibility) after their insurance
  coverage is exhausted.

6
How Do LTC Partnerships Work?

• Under the DRA, states are allowed to develop LTC
  partnerships using the dollar-for-dollar model.
  
• Dollar-for-dollar policies protect a specific
  amount of personal assets. For every dollar that
  a LTC Partnership insurance policy pays out in
  benefits, a dollar of assets can be protected
  during the Medicaid eligibility determination.
• The amount protected is calculated based on the
  amount of benefits paid by the LTC insurance
  company on the policyholders behalf (it is not
  equal to the amount of the premiums paid and not
  necessarily equal to the maximum benefit).

7
LTC Partnership Dollar for Dollar Scenarios

• Scenario 1 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.

8
LTC Partnership Dollar for Dollar Scenarios

• Scenario 2 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 reduced her
  assets to 102,000 (100,000 in excluded assets
  plus the 2,000 Medicaid resource limit available
  to all Medicaid applicants).

9
LTC Partnership Dollar for Dollar Scenarios

• Scenario 3 In this case, 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
  state plan covered Medicaid services, but the LTC
  insurance policy would continue to pay for LTC
  until the policy is exhausted.

10
Steps Taken
11
Steps Taken
12
Next Steps