Virginias LongTerm Care Partnership

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Virginias Long-Term Care Partnership

• Department of Medical Assistance Services

Suzanne S. Gore, Senior Policy Analyst Suzanne.gor
e_at_dmas.virginia.gov Spring 2007
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Presentation Outline
Virginias Medicaid Program Virginias Interest
in a Long-term Care Partnership What is a
Long-term Care Partnership? How will the
Long-term Care Partnership Work?
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Virginia Medicaid 101

• Largest health care financing program for
  individuals who are indigent in Virginia.
• In FY 2005, Virginia Medicaid provided
  reimbursement for 777,313 recipients at a cost of
  4.4 billion.
• Program costs are shared by the state and federal
  government
• Virginias share is 50 in 2007
• Each state submits a State Plan to the Centers
  for Medicare and Medicaid Services (CMS) for
  approval.

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Virginia Medicaid 101

• All Medicaid applicants must meet both income and
  resource (asset) requirements.
• Medicaid eligibility is EXTREMELY complex.
• In Virginia, Medicaid eligibility determination
  takes place at local departments of social
  services.
• Everyone has a right to apply for Medicaid at
  anytime.

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Virginias Medicaid Enrollment(By Eligibility
Category)

• Blind or Disabled (20)
• Children (57)
• Adults (13)
• Aged (10)

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Medicaid Expenditure TrendsAverage Annual Cost
per Enrollee
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Virginias Spending on Long-term Care (LTC)
Services

• Aged, Blind and Disabled Populations
• 30 of participants
• 70 of costs

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Long-term Care Services in Virginias Medicaid
Program

• Institutional Care
• Nursing Facility
• Intermediate Care Facilities for individuals with
  Mental Retardation (ICF-MR)
• Community-Based Care
• Home and Community Based Waiver Programs
• Program for All Inclusive Care for the Elderly
  (PACE)

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Presentation Outline
Virginias Medicaid Program Virginias Interest
in a Long-term Care Partnership What is a
Long-term Care Partnership? How will the
Long-term Care Partnership Work?
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Why is Virginia Interested in a Long-term Care
Partnership?
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Legislative Mandate for a Long-term Care
Partnership (2004)

• In 2004, Senate Bill 266 (Edwards) amended the
  Code of Virginia for the development of a
  long-term care partnership program
• A provision, consistent with federal law, to
  establish a long-term care partnership program
  that shall encourage the private purchase of
  long-term care insurance as the primary source
  of funding a participant's long-term care. Such
  a program shall provide protection from estate
  recovery as authorized by federal law. (Code of
  Virginia 32.1-325)

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Legislative Mandate for a Long-term Care
Partnership(Again in 2006)

• In 2006, House Bill 759 (Hamilton) further
  amended 32.1-325 of the Code
• A provision, when authorized by and in compliance
  with federal law, to establish a public-private
  long-term care partnership program between the
  Commonwealth of Virginia and private insurance
  companies that shall be established through the
  filing of an amendment to the state plan for
  medical assistance services by the Department of
  Medical Assistance Services. The purpose of the
  program shall be to reduce Medicaid costs for
  long-term care by delaying or eliminating
  dependence on Medicaid for such services through
  encouraging the purchase of private long-term
  care insurance policies that have been designated
  as qualified state long-term care insurance
  partnerships and may be used as the first source
  of benefits for the participant's long-term care.
  Components of the program, including the
  treatment of assets for Medicaid eligibility and
  estate recovery, shall be structured in
  accordance with federal law and applicable
  federal guidelines.

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Presentation Outline
Virginias Medicaid Program Virginias Interest
in a Long-term Care Partnership What is a
Long-term Care Partnership? How will the
Long-term Care Partnership Work?
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Long-term Care Partnerships-Overview-

• 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 encourage citizens to purchase a
  limited, and therefore more affordable amount of
  LTC insurance coverage.

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How Do LTC Partnerships Work?

• Two main benefits - Protection of assets during
• Medicaid eligibility determination and
• Estate recovery.
• 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.

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Long-term Care Partnerships-Background-

• LTC Partnerships combine private LTC insurance
  with special access to Medicaid for individuals
  who use their LTC insurance benefits.
• 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.

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Long-term Care Partnerships-Background-

• LTC Partnerships in four states (California,
  Connecticut, Indiana, and New York) were
  grand-fathered and not subjected to the changed
  estate recovery provisions.
• The Deficit Reduction Act of 2005 (DRA) lifted
  the moratorium on estate recovery disregards and
  encouraged new development of LTC Partnerships.

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Presentation Outline
Virginias Medicaid Program Virginias Interest
in a Long-term Care Partnership What is a
Long-term Care Partnership? How do Long-term Care
Partnerships Work?
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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.

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How Do LTC Partnerships Work?

• Dollar-for-Dollar Model
• The amount protected is calculated based on
• The amount of benefits paid by the LTC insurance
  company on the policyholders behalf.
• It is not necessarily equal to the amount of the
  premiums paid or the maximum benefit.

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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.

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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).

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LTC Partnership Dollar for Dollar
Scenarios(A bit tricky! Pay attention!)

• 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.

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Policy Requirements

• How will current policies be addressed?
• Neither grand fathering nor exchanging are
  allowed. A new policy must be issued after
  September 1, 2007.
• What special requirements do LTC Partnership
  policies have?
• Inflation Protection
• Under age 61 Compound Inflation Protection
• Ages 61 to 75 Simple Inflation Protection
• NO other requirements are allowed per federal law

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Information on the Policies

• Will LTC Partnership policies be more expensive
  than non-Partnership LTC insurance policies?
• They should be priced roughly the same as other
  policies with similar levels of coverage.
• How much will agents who sell Partnership
  policies know about Medicaid?
• Not that much! Medicaid eligibility is extremely
  complex and virtually impossible to predict many
  years into the future.

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Partnership Policies and Medicaid Eligibility

• How will owners of Partnership policies and their
  family members know that a policy qualifies as a
  Partnership policy?
• This information will be included with the
  policy, but not be printed on the policy itself.
• If there is any doubt, call the insurance
  carrier.
• Will my Virginia Partnership policy qualify me
  for dollar- for-dollar asset protection in other
  states?
• Yes. Virginia plans to participate in the
  national
• reciprocity agreement. However, it is likely
  that
• not all states will participate in this. Also,
  the applicant will need to met all Medicaid
  requirements for the new state of residence.

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Challenges and Concerns

• Concern that policies will be positioned
• as providing automatic eligibility for
• Medicaid
• Overall complexity of both Medicaid
• and LTC insurance
• Strict federal
• requirements

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The Virginia Long-term Care Partnership

• Launch Date
• September 1, 2007
• Press Event
• September 27, 2007
• with the
• Own Your Future long-term care awareness
  campaign