Alabama Long-Term Care Insurance Partnership Program

What is the Alabama Long-Term Care Insurance Partnership Program (“Partnership Program”)?

The Partnership Program is designed to encourage you to purchase long term care insurance by offering a plan that will allow Medicaid to disregard some or all of your assets for Medicaid eligibility and estate recovery purposes. These plans, called Partnership Plans, help provide you with asset protection in the event you use your policy benefits and need to seek continued benefits through Medicaid.

What is Long-Term Care (LTC)?

Long-term care is when you are no longer able to care for yourself due to suffering from a cognitive impairment such as Alzheimer’s Disease, or you need assistance in performing your Activities of Daily Living (ADLs) such as dressing, bathing, eating, toileting, transferring, and continence for an extended period of time. Long-term care services are usually performed in a nursing home, assisted living facility, in your own home, or in a community based setting. Many people believe that long- term care is only for older people, when in fact the needs for long-term care can strike anyone at anytime due to an accident or a debilitating illness.

One of the most common misconceptions is that Medicaid and Medicare will pay for LTC. However, beyond the limited long-term care benefits provided by Medicaid and/or Medicare (assuming that you meet the eligibility requirements for one or both), you are responsible for your long-term care costs, whether you choose to purchase a long-term care insurance policy to cover some or all of the cost, pay for the care out of your pocket with your assets, or rely on a family member to provide your long-term care.

What makes a Partnership Policy?

Partnership Policies look very similar to traditional long-term care insurance policies except they must include annual compound inflation protection for individuals under age 61 and some form of inflation protection for individuals ages 61-76. Inflation protection helps the policy keep up with the rising costs of long-term care services.

A Partnership Policy provides for asset disregard when applying for Medicaid. This means that an amount of the policyholder’s assets equal to the dollar amount of long-term care insurance benefits paid under a qualified Partnership Policy will be disregarded on a dollar-for-dollar basis for the purpose of determining eligibility and estate recovery for Medicaid. All other Medicaid eligibility requirements will apply.

The Deficit Reduction Act of 2005 authorized states to enact Partnership Programs. The Alabama Medicaid Agency, the Alabama Department of Insurance and private insurance companies have worked together to develop Partnership Policies that meet the requirements of the law. Only these policies which have been certified by the Alabama Department of Insurance as Partnership Policies are eligible.

If I get a Partnership Policy, does that mean I am qualified for Medicaid?

No, the purchase of a Partnership Policy does not automatically qualify you for Medicaid.

What are the Requirements for a Partnership Policy?

In order for a policy to qualify as a Partnership Policy, it must, among other requirements:

be issued to an individual on or after March 1, 2009;
cover an individual who was an Alabama resident when coverage first becomes effective under the policy;
be a tax-qualified policy under Section 7702(B)(b) of the Internal Revenue Code of 1986;
meet stringent consumer protection standards; and
meet the following inflation requirements:
- For ages 60 or younger – provides compound annual inflation protection
- For ages 61 thru 75 - provides some level of inflation protection
- For ages 76 and older – no purchase of inflation protection is required

What Could Disqualify a Policy as a Partnership Policy?

If you purchase a Partnership Policy and later decide to make any changes, you should first check with your insurance company to determine what the change will do to your Partnership Policy.

What happens to my Partnership Policy if I move to another state?

If you move to a state that does not have a Partnership Program or does not recognize your policy as a Partnership Policy, you would not receive beneficial treatment of your policy under the Medicaid program of that state. If you move to a state that does have a Partnership Program, you should check with that state’s Medicaid Agency to be sure that your Alabama LTC Partnership Policy will be accepted and what the asset disregard will be.

Will Partnership Policies issued in other states with Partnership Policies be accepted in Alabama?

Yes, the Alabama Partnership Program will recognize policies from other states Long-Term Care Partnership Programs. You will need to check with the Alabama Medicaid Agency to be sure that your asset disregard will be the same.

I have a Long Term Care Policy that is not a Partnership Policy. Can I exchange my current policy for a Partnership Policy?

A Partnership Policy cannot be issued in Alabama until on or before March 1, 2009—the date when the Partnership Program in Alabama became effective. The issue date is the effective date of coverage under the policy. A non-partnership long-term care policy may be exchanged for a Partnership Policy; however, you should contact your insurance company regarding what needs to be done to exchange the policies. Keep in mind that if you decide to exchange your current policy for a Partnership Policy, you may be subject to underwriting criteria and the premium for the policy may be higher than what you pay now.

For information regarding Medicaid eligibility and other questions contact:

Alabama Medicaid Agency
501 Dexter Avenue
Montgomery, Alabama 36104
Telephone: 1-800-362-1504
Web site: www.medicaid.alabama.gov

November 07, 2009