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What is State Partnership Long-Term Care Insurance ?

Kevin Wenke

Kevin Wenke

Owner at Decision Tree Financial. CFP. CLU

Most states will provide partnership long-term care insurance plans to partner with their citizens to make sure they have insurance to cover potential future needs and protect their legacy assets.

In the Article Are There Long-Term Care Tax Deductions Pay for Long-Term Care Insurance, one of the things I referred to was State Partnership Long Term Care.

If someone runs out of money while in a nursing home or while needing long-term care services, they normally fall into a state welfare program that provides basic care.

But most states don’t want you, or any more people in their welfare systems.  Even though roughly half of the program’s money comes from the federal government, the other half comes from the state’s budget and they would rather not spend it on you.

Therefore, many states have what are known as State Partnership Long Term Care Plans where the state partners with an individual when they purchase a long-term care policy.

Here is how it works.

Let’s assume you have $800,000.  Suppose the cost of one year of long-term care is $100,000.  Further, suppose that you want control at least $500,000 for your entire life.  You don’t want to give it away and you sure don’t want the state taking it away from you to pay for your long-term care needs

Enter the Partnership Long-Term Care Policy…

State Partnership Long-Term Care Insurance

With this policy, the state basically says “Ok, since you bought a partnership plan, we will let you keep the amount of money that is equal to the level of benefits you bought so that if you run out of benefits, we will allow you to go on Medicaid and you can keep your money.”

Again, assume the cost of long-term care is $100,000 per year.  If you were to buy a policy that provides $100,000 a year in benefits for five years, you would be able to protect $500,000.  In this example, the goal was $500,000 but it could be any amount.

I used this example to illustrate that while you have five years of benefits you can use this time to gift the other $300,000 that you wanted to keep as long as possible but are OK with giving away to whom you choose.

The policy can give you time to give your assets away and avoid the Medicaid claw back provision on the amount over the Partnership Plan’s benefit limits.

This can be a win-win for both you and the state. The state keeps you off welfare and you keep your assets while getting a higher level of care.

So, will a state Partnership Plan work for you? A good start to finding all of your long-term care solutions can come from downloading my book The Secret to Long-Term Care Planning. 

In this easy-reading book you will find information you need to know… but more importantly the SECRET to how to use that information!

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