03 Jul Texas Long-Term Care Partnership Program
As an incentive for Texans to get long-term care insurance (so the state through Medicaid would not have to pay as much for long-term care), Texas has a Long-Term Care Partnership Program (LTCP) which is a public-private partnership between state agencies (Texas Department of Health and Human Services and the Texas Department of Insurance) and private insurance providers to encourage individuals to plan for their long-term care needs.
The general concept is that if you use up all of the benefits of your long-term care policy purchased under this program, then there is some protection of an equivalent amount from Medicaid spend-down (spending down your countable resources) and from Medicaid estate recovery. However, ownership of a qualified LTCP policy doesn’t guarantee access to Medicaid even if the applicant uses all of the policy as the applicant must still meet all the requirements for Medicaid eligibility.
Medicaid will not pay for long-term care services that are paid by the LTCP policy until such time as the benefits of the policy are fully exhausted. If so and if all the Medicaid eligibility requirements are met, then Medicaid disregards the designated countable resource value (through a form submitted to Texas Department of Health and Human Services) as to the countable resource disregarded after designation. The potential applicant must (1) report any sale, transfer or conversion of a designated resource as of the date the reported transaction took place, and (2) document and verify designated resources still owned by the applicant at the time of each Medicaid redetermination.
The Spousal Protected Resource Amount (which determines how much the well-spouse who lives in the community is entitled without spend-down) is determined before designation of countable resources for the LTCP disregard. The LTCP disregard is only applicable to resources owned by the eligible spouse. If the spouse applying for Medicaid has rental property producing income and that rental property is the asset for disregard, then it could be transferred without penalty (except as to the income).
Only countable resources may be designated for the LTCP disregard. It may not be applied to excess home equity. For example, if the home equity (presently a $713,000 limit) is $800,000, the person would not be eligible for vendor payments since the equity exceeds the limit which is a countable resource to the extent of the excess (the $87,000 excess cannot be designated).
If the designated countable resource decreases in value, then additional countable resources can be substituted for the difference. However, if the designated countable resource has appreciated in value, then only the designated value is disregarded, and the excess is counted as a resource.
If the LTCP participant bought a policy, an equal amount can be transferred without penalty. So, if you own assets that might appreciate, then you might immediately transfer the asset if you’re less concerned about capital gains tax issues. Any appreciated value could be subject to the transfer penalty rules.
If the LTCP participant had a designated resource amount of $100,000 in an account and then passed still owning that account, Medicaid Estate Recovery is avoided dollar to dollar for that amount. When the LTCP participant had fewer countable resources at death than designated, then the full disregarded amount will be disregarded for Medicaid Estate Recovery.
Although this LTCP has been in existence for a while, we have not seen it utilized as much as the state had hoped. As baby boomers continue to age, additional incentives should be considered to reduce the increasing demand for governmental assistance due to the high cost of long-term care.
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