The North Carolina Long-Term Care Partnership Program (“LTCP”) was authorized in 2010 by the NC legislators. The LTCP encourages the purcahse of long-term care insurance and is aimed at middle and upper income individuals. Policy holders who purchase a qualified LTCP insurance policy, and then exhaust that coverage can access Medicaid without the usual spend-down required to continue receiving long-term care. Here’s more about the history of the LTCP and how it works in North Carolina.
Under the Deficit Reduction Act of 2005, states were encouraged to adopt LTCP programs. Under the legislation passed in 2010, North Carolina started its own LTCP program. The law is found at NC General Statutes 108A-70.4.
Long-term care insurance policies that are considered “partnership policies” provide special protection under the North Carolina LTCP program. There are specific requirements for a policy to be considered a “partnership policy.” The policy must:
- be a tax-qualified policy
- contain specified inflation protection if sold to an individual under age 76
- meet certain consumer protection requirements
In addition, to obtain the benefits of the special protections, the insured must be a resident of North Carolina when the benefits are claimed. These polices are available from participating insurance companies who are authorized by the North Carolina Department of Insurance to market and sell these policies to NC residents. These companies are listed on the NC Department of Insurance website, under the SHIIP program (State Health Insurance Information Program).
Matt buys long-term care insurance that is considered a “partnership policy” in North Carolina that has a maximum benefit of $100,000 with inflation coverage as requires. Many years later he receives benefits from the policy totaling $150,000 (the original policy value plus annual increases for inflation). However, he continues to need long-term care in a nursing home after the policy’s benefits are exhausted and he needs Medicaid to cover costs of his care. Matt still has investments in his name of over $200,000. Because Matt had purchased a partnership policy for long-term care, and he received $150,000 of benefits, he does not have to spend down to $2,000 in order to qualify for Medicaid. Instead, Matt only needs to spend down to $152,000 in countable assets to qualify for Medicaid. In addition, when Matt dies Medicaid will not claim the first $152,000 of his estate through the estate recovery program.
The bad news for North Carolina Partnership Policies: Expanded Estate Recovery
North Carolina’s program does have a catch in that some other states don’t have: expanded estate recovery. That means more assets are considered available for estate recovery for a person who gets the benefit of the LTCP program, than for someone who doesn’t. In effect, North Carolina estate recovery may be able to force the sale of certain assets for someone who uses the partnerhip policy, that would not be subject to claims in a nonpartnership policy situation.
To follow Matt’s example above, if Matt spends down to $152,000 of countable assets he can qualify for Medicaid. Presume Matt receives Medicaid for nursing home care for about 2 years then when he dies, he still has his home (a noncountable asset) and $152,000 in the bank. Presume that Matt co-owns this home with his children in joint tenancy. The North Carolina law would allow North Carolina to recover against the jointly owned property even though it is not part of Matt’s estate. That’s because for the LTCP program, Estate Recovery can attack any real or personal property, owned jointly with right of survivorship (as well as life estates), even though those assets would not be considered to be part of Matt’s estate.