Exactly…the link to the NJ State site that I provided illustrated this concept.
“The following is an example of how a New Jersey Partnership for Long-Term Care Qualified policy works:
Let's say John purchases a New Jersey Partnership for Long-Term Care policy with a value of $300,000. Some years later he receives benefits under that policy up to the policy’s lifetime maximum coverage (adjusted for inflation) equaling $400,000. John eventually requires more long-term care services but has run out of insurance and now applies for Medicaid.
If John's policy was not a Partnership-qualified policy, in order to qualify for Medicaid, he would only be able to keep $2,000 in assets. He would have to spend down any assets over and above the amount allowed by his state. However, because John bought a Partnership-qualified policy, if he needs to apply for Medicaid and is deemed eligible, he can keep $402,000 in assets and qualify for Medicaid.”
In our case, today our policy has $670,710 in maximum benefits. Using 22 years as an example when we’re 85, our 3% inflation rider will provide $1,123,339 in partnership coverage.
“The following is an example of how a New Jersey Partnership for Long-Term Care Qualified policy works:
Let's say John purchases a New Jersey Partnership for Long-Term Care policy with a value of $300,000. Some years later he receives benefits under that policy up to the policy’s lifetime maximum coverage (adjusted for inflation) equaling $400,000. John eventually requires more long-term care services but has run out of insurance and now applies for Medicaid.
If John's policy was not a Partnership-qualified policy, in order to qualify for Medicaid, he would only be able to keep $2,000 in assets. He would have to spend down any assets over and above the amount allowed by his state. However, because John bought a Partnership-qualified policy, if he needs to apply for Medicaid and is deemed eligible, he can keep $402,000 in assets and qualify for Medicaid.”
In our case, today our policy has $670,710 in maximum benefits. Using 22 years as an example when we’re 85, our 3% inflation rider will provide $1,123,339 in partnership coverage.
Long-term care partnership policies protect an amount of assets equal to the amount of benefits PAID, not the amount of potential benefits.I am no expert, but that sounds pretty typical.Our NGL policy is a partnership as WoW2012 describes. In our state it allows you to apply for Medicaid retaining up to $300,000 above the normal State Medicaid limit.
https://www.partnershipforlongtermcare. ... index.htmlLong-term care partnership policies protect assets if the policyholder incurs a catastrophic scenario. Affordable long-term care partnership policies are available for sale in 41 states.
Most LTCi policies have a cap on benefits. You are pre-paying for services. There is no protection against going broke if you incur catastrophic scenario. Seems the opposite of insurance.
So, if one has a couple decade long tail event, they could still be spending millions of their own dollars, despite having "insurance".
The partnership program, even if available to me, would not do much to preserve my portfolio. It is basically pre-paying for the $300k of "protection".
I would rather have a policy that requires me to pay the 1st $300k and then protects me against low-probability tail risk, rather than one that pays the first $300k, and leaves me on the hook for the rest.
A policy purchased today with $300K of benefits will grow to over $600K within 24 years because LTC Partnership policies have to include inflation protection of 3% compound (in most states). If it's a couple and they are sharing benefits (which most do) then the policy would have over $1.2M in benefits within 24 years. If the policy benefits were exhausted the policyholder could protect $1.2M in assets from Medicaid, including Medicaid estate recovery.
Of course, if this couple had $5.0M in assets $3.8M might still be at risk. If they were smart, they could transfer some/most/all of the remaining $3.8M into an irrevocable trust and protect all of that from Medicaid as well, using the 5-year look back rule.
Bottom line: long-term care insurance gives you options (especially long-term care partnership policies).
Statistics: Posted by iim7V7IM7 — Sun Mar 10, 2024 6:39 am — Replies 58 — Views 6731