Deficit Reduction Omnibus ACT of 2005 Information

 

In February 2006 the Government made another step to help help out the Long Term Care Insurance industry, the Deficit Reduction Omnibus ACT of 2005 (DRA) was passed. This new law makes it more difficult for for individuals to qualify for Medicaid. Medicaid has extended its look-back period for all asset transfers from 3 to 5 years long and the required spend down requirements must be met before the penalty period. In addition, individuals with home equity more than $500,000 will be ineligible for Medicaid. The DRA of 2005 also allows for nationwide expansion for the Long Term Care Insurance Partnership Programs.

About Long Term Care Partnership Programs

Long Term Care Partnership Policies allow consumers to keep some of their assets that they would most likely spend down in order to qualify for Medicaid when needing Long Term Care. Most Partnership Programs work on a Dollar-for-Dollar basis, for every dollar that a policy holder would use in their Long Term Care Insurance benefits, that is how much of your assets you can keep. Example, if you have a LTC Insurance Partnership Policy and you are using your Long Term Care Insurance benefits and you use $100,000 worth for care and your benefits run out so you need to go on Medicaid, $100,000 of your assets will be exempt from Medicaid spend down.

Long Term Care Partnership Programs were originally developed in the 1980's and only 4 states participated in this to include California, Connecticut, Indiana and New York. Partnership Programs were developed to encourage people who might want to turn to Medicaid for their Long Term Care needs to purchase Long TC Insurance. Partnership Policies are just like traditional Long Term Care Insurance policies with the exception that it is required that the policies are tax-qualified (most LTC Insurance policies sold today are tax-qualified) and some type of inflation is required for those 61 - 75 years of age. For a complete list of states that have approved Long Term Care Partnership Programs click here.

Click here to learn more about the Long Term Partnership Programs.

Source: http://www.michigan.gov/documents/meetingnotes_04242006_Documents_171879_7.pdf