Medical Assistance for Long-Term Care Services Long-Term Care Partnership Insurance

Long-Term Care (LTC) insurance provides coverage for services such as custodial care, nursing care, personal care, and assistance with activities of daily living for persons who need such care due to common conditions associated with old age, chronic mental or physical illness, or injury or cognitive impairment. LTC insurance covers services provided in settings that may include, but are not limited to, the beneficiary’s home, assisted living, or long-term care facilities. LTC insurance includes both individual policies and certificates issued under a group insurance contract.

Some LTC insurance is qualified under the Minnesota Long-Term Care Partnership (LTCP) Program. A long-term care insurance policy that qualifies under the LTCP is known as a “partnership policy.”

The LTCP Program is a public-private arrangement between Minnesota’s Medical Assistance program and long-term care insurers. It enables people who buy certain qualified LTC insurance policies to keep more assets if they later need to request MA-LTC. It allows people to exclude assets and protect assets from MA recoveries in an amount equal to the benefits paid out by a partnership policy as of the effective date of eligibility for MA-LTC. This is called LTCP asset protection.

For more information, see the Minnesota Long-Term Care Partnership Program.

Individuals Eligible for Asset Protection under the Long-Term Care Partnership Program

To be eligible for LTCP asset protection under the LTCP program, a person must be:

  • A beneficiary of a LTC insurance policy that was qualified as a partnership policy at the time of purchase, or has been converted to a partnership policy through an endorsement, exchange or rider, and has been a Minnesota resident at the time the partnership policy was purchased; or

  • A beneficiary of a partnership policy established by another state that has a reciprocity agreement with Minnesota. The person must have been a resident of the other state on the date the policy was purchased.

Verifying A Partnership Policy

People who request MA-LTC and believe they have a LTC insurance policy that qualifies as a partnership policy must reach out to their insurer to verify that the policy qualifies as a partnership policy. The insurer is responsible for verifying this qualification by completing the LTC Partnership Insurance Policy Evaluation Form (DHS-5426B), or by providing other documentation signed by a representative of the insurer that includes all of the following information:

  • Whether the policy qualifies as a partnership policy;

  • The amount of benefits the insurer has paid out since July 1, 2006; and

  • Whether the beneficiary or policyholder has exhausted all benefits.

The servicing agency must give the beneficiary or policyholder at least 30 days to collect and return the verification that a policy qualifies for the partnership program.

Processing a Request for MA-LTC When the Person May Have a Partnership Policy

Servicing agencies must process the MA-LTC application or request within the processing period if the person is otherwise eligible and has countable assets within the applicable asset limit, even if the person has not verified that the policy qualifies for the partnership program. If the verification is returned after the application or request has been approved, the worker must determine the amount of assets the person can designate for protection.

If the person is not otherwise eligible for MA-LTC due to excess assets, the servicing agency must give the beneficiary or policyholder 30 days to return the verification that a policy qualifies for the partnership program. If the verification is not returned within 30 days, the agency may extend the processing period so long as the person is working to obtain the verification as outlined in the Minnesota Health Care Programs Eligibility Policy Manual (EPM) 1.2.4 MHCP Processing Period. If the person is not cooperating, the agency must assume the insurance policy does not qualify for the partnership program.

Servicing agencies must follow the step-by-step ONEsource procedures, “Instructions for Long-Term Care Insurance,” when processing a request for MA-LTC when a person may have a partnership policy.

Partnership Policy Notice Requirement

After verification of partnership policy is received, a notice must be provided to the person explaining:

  • Whether the person is eligible for asset protection, and

  • The amount of assets that can be designated for protection after receiving verification that the person has a qualified partnership policy.

Protected Assets under the Long-Term Care Partnership Program

A  person with a partnership policy may designate assets for protection up to the amount of benefits that had been paid out under policy. Protected assets are not counted when establishing MA-LTC eligibility and cannot be recovered by the state to repay MA costs when a person dies.

Assets can be designated for protection when MA-LTC eligibility is established, while receiving MA-LTC, or during the estate recovery process after a person dies.

A person may protect assets up to his or her Protected Asset Limit (PAL). If the value of the protected assets exceeds the PAL, the excess value is counted against the MA asset limit and is not protected from estate recovery. The excess value can be reduced to maintain MA-LTC eligibility.

Rules for Protected Assets

The following rules apply to protected assets under the LTCP program:

  • Enrollees may keep protected assets.

  • The value of protected assets a person keeps is updated each year at the time of the MA-LTC renewal. The updated value counts against the PAL.

  • Enrollees may transfer a protected asset to another person without a transfer penalty. A transferred asset counts against the PAL based on the value of the asset on the day the asset is transferred.

  • Enrollees may use a protected asset to obtain another asset, which then becomes protected.

  • An enrollee may deplete or spend a protected asset. The asset continues to be protected and is counted against the PAL even though the person no longer has it.

  • After an asset is designated for protection, it cannot be undesignated in favor of protecting another asset.

  • Enrollees must report changes in the status of protected assets at the time of the MA-LTC renewal. Changes include, but are not limited to, transferring, depleting or spending an asset, or using one asset to obtain another asset.

  • Certain assets include provisions to reimburse Minnesota Department of Human Services (DHS). Due to this payback provision, these assets cannot be protected:

    • Special needs trust or a pooled trust

    • Annuity interests on which the state must be named a preferred remainder beneficiary

Unused Asset Protection

An enrollee may have unused asset protection for a number of reasons, including:

  • Not all available asset protections may have been used at the time of request for MA-LTC.

  • Increases in the PAL may occur when a person continues to receive benefits from a partnership policy while receiving MA-LTC.

    • If the value of a protected asset increases, unused asset protection will automatically apply to protect the increased value. Additional designation is not necessary.

  • Unused asset protection can be used to:

    • more fully protect an asset that is only partially protected;

    • protect additional assets that become available during a person’s lifetime; and

    • protect assets in a person’s estate after the person dies.

Interaction with MA-LTC and Other Policies and Programs

A person must be eligible for MA-LTC or eligible for MA during a transfer penalty in order to protect assets under a partnership policy. When an applicant designates assets for protection and is denied MA eligibility, the asset designation is void. The person will have to designate assets again when reapplying in the future. Once protected, assets remain protected even if a person is no longer receiving MA services.

  • Community Spouse Asset Allowance (CSAA)

    • In cases where an LTC spouse has a partnership policy, the calculation of the CSAA and the division of assets should occur before assets are designated for protection under the LTCP Program. Assets attributable to the LTC spouse may be designated for protection.

  • Transfer Penalty

    • If a person requesting MA-LTC is subject to a penalty due to an uncompensated transfer, the person may still designate assets for protection if he or she is otherwise eligible for MA-LTC. Protecting assets does not shorten the length of a penalty period.

  • Third-Party Liability

    • LTC insurance is considered third-party liability for a person receiving MA-LTC.

  • Alternative Care (AC)

    • Asset protection under the LTCP Program does not apply to eligibility under the AC program. However, once a person qualifies for MA-LTC, protected assets are protected from recovery by the state as repayment for either MA or AC costs the person incurred.

Estate Recovery and MA Liens

When a person with a partnership policy who has received MA-LTC dies, assets in the person’s estate that the person protected under the LTCP Program during his or her lifetime are protected from estate recovery up to the PAL. When a person dies who has unused asset protection, the deceased person’s personal representative may designate additional assets in the estate, up to the PAL, to be protected from recovery by the state.

Protected assets cannot be recovered for the MA costs of the deceased spouse from the estate of the surviving spouse when protected assets of a deceased person with a partnership policy are transferred to a surviving spouse outside of probate. Protected assets transferred to a surviving spouse can be recovered for the MA costs of the surviving spouse unless the surviving spouse also protected the assets.

Legal Citations

Minnesota Statutes, section 256B.0571

United States Code, title 42, section 1396p(c)