*** The Health Care Programs Manual (HCPM) has been replaced by the Minnesota Health Care Programs Eligibility Policy Manual (EPM) as of June 1, 2016. Please refer to the EPM for current health care program policy information. ***
Effective: April 1, 2013 |
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23.40 - Long-Term Care Partnership (LTCP) Insurance |
Archived: June 1, 2016 |
The LTCP enables people who buy certain qualified Long-Term Care (LTC) insurance policies to keep more assets if they later need to request Medical Assistance (MA) to help pay for their LTC services. It allows applicants and enrollees to exclude assets and protect assets from MA recoveries, in an amount equal to the benefits paid out by a qualified long-term care insurance policy as of the effective date of eligibility for MA.
LTC insurance provides coverage for services such as, custodial care, nursing care, personal care, and assistance with activities of daily living for persons who are in need of such care due to old age, chronic mental or physical illness, injury or cognitive impairment. LTC insurance covers services provided in settings that may include, but are not limited to, the recipient’s home, assisted living or long-term care facilities. Long-term care insurance includes both individual policies and certificates issued under a group insurance contract.
Individuals Eligible to Participate in LTCP.
What Are Protected Assets under LTCP
Interaction With Other Policies and Programs
Long-Term Care Partnership Determination
LTC Insurance Qualifies for LTCP
LTC Insurance Does Not Qualify for LTCP
New Assets Received Between MA Renewals
Individuals Eligible to Participate in LTCP
To be eligible to participate in the LTCP, a person must:
l be a beneficiary of a Partnership policy that was purchased on or after July 1, 2006, or was purchased prior to July 1, 2006, but was converted to a Partnership policy through an endorsement, exchange or rider, and have been a Minnesota resident at the time the Partnership policy was purchased, OR
l be a beneficiary of a policy that qualifies for a LTCP 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.
What Are Protected Assets under LTCP
The LTCP allows a person with a Partnership Policy to designate assets for protection. This includes policies where all policy benefits have been used or exhausted. Protected assets are excluded assets 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 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 for the purpose of maintaining MA-LTC eligibility.
The following rules apply to protected assets under the LTCP:
l Enrollees may keep protected assets.
l Update the value of protected assets a person keeps each year at the time of the MA-LTC renewal. Count the updated value against the PAL.
l 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 they transfer it.
l Enrollees may use a protected asset to obtain another asset, which then becomes protected.
Example:
Bill has $20,000 in protected funds in a checking account. He uses the $20,000 to purchase a certificate of deposit (CD).
Action:
Count the CD against the PAL. The CD becomes the protected asset, replacing the funds from the checking account that were used to purchase it.
l 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.
l After an asset is designated for protection, it cannot be undesignated in favor of protecting another asset.
l 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.
l The following assets cannot be protected under the LTCP and must be available after death to reimburse DHS up to the amount of MA benefits paid on behalf of the deceased individual:
n Special needs trust or a pooled trust.
n Annuity interests on which the state must be named a preferred remainder beneficiary.
An enrollee may have unused asset protection for a number of reasons, including:
l All available asset protection may not have been used at the time of request for MA-LTC services.
l 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:
l more fully protect an asset that is only partially protected,
l protect additional assets that become available during a person’s lifetime, and
l protect assets in a person’s estate after the person dies.
Interaction With Other Policies and Programs
l MA Enrollment.
A person must be eligible for MA-LTC or eligible for MA during a transfer penalty in order to protect assets under the LTCP. When an applicant designates assets for protection under the LTCP 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.
l Community Spouse Asset Allowance.
In cases where a LTC spouse has a Partnership policy, the calculation of the Community Spouse Asset Allowance and the division of assets should occur before assets are designated for protection under the LTCP. Assets attributable to the LTC spouse may be designated for protection.
l 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.
l Third Party Liability.
LTC insurance is considered third-party liability for a person receiving MA-LTC services.
l Alternative Care (AC).
Asset protection under the LTCP 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.
Long-Term Care Partnership Determination
When an applicant or enrollee reports having LTC insurance, use the Minnesota Health Care Program Request for Information (DHS-3271) to request the following documents:
l A completed Permission to Share Long-Term Care Insurance Information (DHS-5426A).
l A copy of the LTC insurance policy or certificate of insurance.
Allow 10 working days for return of the documents.
Approve MA-LTC applicants or enrollees that meet all other eligibility requirements and are within the asset limit without protecting assets. Enter case notes with the heading **Protected Assets LTCP** and include the following information:
l the applicant or enrollee is eligible without protecting assets,
l the date you requested the insurance information, and
l the enrollee may be able to protect assets in the future.
Follow standard procedures if the person is subject to an asset transfer penalty.
If the enrollee who is eligible without protecting assets does not return the DHS-5426A and insurance policies:
l Enter a case note with the heading **Protected Assets LTCP** and record that the DHS-5426A and the LTC insurance policy were not returned, and must be provided if the person wants to protect assets in the future.
l Request these documents again at the time of the renewal or whenever the person reports receiving a new asset.
l Send a SPEC/LETR with the following note:
"You did not provide a copy of your [insert which documents were not returned]. We need this information to see if you can protect any of your assets for Medical Assistance payment of long-term care services."
If the applicant or enrollee has excess assets but is otherwise eligible for MA-LTC, pend MA-LTC and enter a case note with the heading **Protected Assets LTCP** and include:
l the date you requested the DHS-5426A and insurance information, and
l an indication that the enrollee may be able to protect assets.
If an applicant or enrollee who has excess assets does not return the DHS-5426A and insurance policies:
l Deny MA-LTC eligibility.
l Enter a case note with the heading **Protected Assets LTCP** stating that the DHS-5426A and the LTC insurance policy were not submitted, the person is ineligible without asset protection, and assets were not reduced timely.
l Add the following worker comment to the denial notice:
"You did not provide a copy of your [insert which documents were not returned]. We need this information to see if you can protect any of your assets for Medical Assistance payment of long-term care services. We will see if you can get Medical Assistance if you apply again."
Take the following actions if an applicant or enrollee returns DHS-5426A and a copy of the LTC insurance policy or certification of insurance:
l Submit a HealthQuest requesting an evaluation of the LTC insurance policy. Note the following information in the HealthQuest:
n the date the applicant or enrollee requested MA payment of LTC services, and
n the effective date of eligibility.
l Fax the signed DHS-5426A and a copy of the LTC insurance policy or certificate of insurance to 651- 431-7446. Write the HealthQuest number on the fax cover sheet.
l DHS staff contacts the insurance company to determine:
n If the insurance is a Partnership policy
n The amount of benefits the Partnership policy has paid since July 1, 2006
n The amount of benefits, if any, that still remains from the Partnership policy
l When DHS receives the information from the insurance company, DHS responds with the following information:
n Whether the LTC insurance qualifies as a Partnership policy
n If the benefits of the insurance have been used in full or partially used
n The amount of the protected asset limit
LTC Insurance Qualifies for LTCP
Applicants or enrollees whose LTC insurance qualifies for the LTCP need to designate protected assets and provide proof of those assets. Send the client:
l Long-term Care Partnership and Medical Assistance Asset Protection brochure (DHS-5426),
l Long-term Care Partnership Protected Assets form (DHS-5426C), and
l A Minnesota Health Care Programs Request for Information (DHS-3271) requesting that the signed and dated DHS-5426C be returned within 30 days with proof of the asset values.
Do not tell the client what asset to designate. However, you may need to assist the client in understanding how the protection of a specific asset may impact MA eligibility and estate recovery.
When the applicant or enrollee returns the completed DHS-5426C:
l Review the list of assets the person designated. Special Needs or pooled trusts and annuities that are required to have the State named as the remainder beneficiary cannot be protected. If the client lists any of these types of assets on the DHS-5426C, contact the client to determine if there are other assets the client wishes to designate instead.
l Determine the value of each designated asset based on the proofs provided. Accept any proof submitted that shows the value in the month of application, or, if retroactive coverage is requested, months for which protection will be provided.
l Total the values of all designated assets.
l When the designated asset total is higher than the PAL, the person must amend the designation. The person can choose an asset to partially protect to bring the value of protected assets down to the PAL.
n Return the DHS-5426C to the person and ask that they amend the designation of assets to reduce the value of protected assets to the PAL and to return the form within ten days.
n When the person returns the amended DHS-5426C, case note the amendment to the designation. Note the amended designation in the Worker Notes section of DHS-5426C.
l When the designated asset total is less than the PAL, record the total in case notes with the heading **Protected Assets LTCP** stating the unused asset protection amount.
l Determine if the person is below the MA asset limit after protecting assets and deny or approve as appropriate, following standard procedures if there is a transfer penalty. Set a reminder in MAXIS (DAIL/TIKL) for 60 days before the renewal to send the appropriate forms to the client.
l If the client is not eligible due to excess assets, add the following worker comment to the denial notice:
"Your Protected Asset Limit is [insert dollar value]. You protected [insert dollar value] in assets under the Long Term Care Partnership. You are still over the asset limit for Medical Assistance payment of long-term care services. You may reapply if you reduce your assets to the limit or if you use more long-term care insurance benefits. We will ask you to make a new list of assets you want to protect when you reapply."
l Complete and submit the MA Lien Worksheet (DHS-3203) if appropriate.
If the Applicant or Enrollee Does Not Return a Completed DHS-5426C:
l If the client is eligible for MA-LTC without protecting assets and does not return the DHS-5426C or decides not to designate any assets at the time, enter case notes with the heading **Protected Assets LTCP** and indicate no assets were initially protected. Resend DHS-5246C at the time of the next renewal.
l If the client has excess assets and does not return the DHS-5246C, deny eligibility. Enter case notes with the heading **Protected Assets LTCP** and indicate no assets were protected. Add the following worker comments to the denial notice:
"Your protected Asset Limit is [insert dollar value]. You did not protect assets under the Long Term Care Partnership. You are over the asset limit for Medical Assistance payment of long-term care services. You may reapply if you protect assets or reduce your assets to the limit."
LTC Insurance Does Not Qualify for LTCP
Take the following action for applicants and enrollees who are eligible for MA-LTC without protecting assets.
l Enter case notes with the heading **Protected Assets LTCP** and indicate insurance is not a qualified Partnership policy. The person may not protect assets under the LTCP.
l Send a SPEC/LETR informing the applicant or enrollee that their LTC insurance does not qualify for the LTC Partnership and they cannot protect any of their assets.
For applicants and enrollees who could qualify for MA-LTC but have excess assets:
l Deny MA eligibility.
l Enter case notes with the heading **Protected Assets LTCP** insurance is not a qualified Partnership policy. The person may not protect assets under the LTCP.
l Add the following worker comments to the denial notice:
"Your long-term care (LTC) insurance does not qualify for the LTC Partnership. You cannot protect any of your assets. You may reapply for Medical Assistance when your assets are near the limit."
Take the following steps at renewal for an MA-LTC enrollee who has protected assets under the LTCP. Begin this process 60 days prior to the MA-LTC enrollee’s annual renewal.
l Determine whether the LTC insurance benefits were exhausted when the person requested MA payment of LTC services or at the time of the last renewal.
l If the LTC insurance benefits have not been exhausted:
n Check the client’s signature on the consent form Permission to Share Long-Term Care Insurance Information (DHS-5426A). If the form was signed within the last 12 months it remains in force. If the form was signed more than 12 months ago send the client a new DHS-5426A to sign and date. Allow 10 working days for return of the form.
n Send the LTC insurance company a copy of the current, signed DHS-5426A and the Long-Term Care Partnership Updated Insurance Information (DHS-5246e), requesting that the DHS-5426E be completed and returned within 10 working days.
l When the DHS-5426E is returned, enter case notes with the heading **Protected Assets LTCP** and note:
n The amount of LTC benefits paid since the insurance company last reported payments.
n Whether the policy is exhausted or not.
n The estimated remaining benefits if the insurance company provides this information.
l Determine the current PAL by adding the amount of LTC benefits paid since the insurance company last reported payment to the PAL from the previous year.
If the benefits were exhausted when the person requested MA payment of LTC or at the last renewal:
l Send the Long-Term Care Partnership Protected Assets (DHS-5426D) and DHS-5426 to the client to obtain updated information about protected assets. Use the Request for Information ( DHS-3271), to request that the completed DHS-5426D and verifications be returned within 30 days. Case note the date you sent these items with the heading **Protected Assets LTCP**.
l If the enrollee fails to return the DHS-5426D follow general processing guidelines for incomplete renewals.
l When the completed DHS-5426D is returned, add the totals for protected assets from the four tables and compare this to the client’s current PAL. Allocate unused asset protection to protect any increased value of protected assets. Note the additional protection for an asset that has increased in value in the worker notes section on DHS-5426D.
l If the total value of the protected asset is higher than the PAL:
n Calculate the amount by which the value of protected assets exceeds the PAL. If the value of protected assets in excess of the PAL, plus any unprotected assets does not exceed the MA asset limit, add the following worker comment to the renewal notice:
"Your Protected Asset Limit under the Long-Term Care Partnership is [insert dollar value]. The value of assets you listed as protected is now higher than your Protected Asset Limit by [insert dollar value]. The excess value is not protected."
n If the value of protected assets in excess of the PAL, plus any unprotected countable assets exceeds the MA asset limit, close MA for the first of the next month after allowing 10-day notice. Add the following worker comment to the closing notice:
"Your Protected Asset Limit under the Long-Term Care Partnership is [insert dollar value]. The value of assets you chose to protect is higher than your Protected Asset Limit by [insert dollar value]. The excess value is not protected."
n When the client reduces assets prior to the effective date of closing, review what assets were reduced. Be sure that the total asset reduction puts the person within the MA asset limit.
m Keep MA-LTC open if assets are reduced by the first of the month.
m Case note which assets were reduced. Differentiate between a reduction of protected assets (to ensure that the person is under the PAL limit) and other countable assets (to be sure the person is within the MA asset limit).
m Note the reduction in the value of protected asset in the worker notes on DHS-5426D.
l If the total value of protected assets is lower than the PAL:
n Calculate the amount of unused asset protection available.
n On the MA-LTC renewal notice, include the following worker comment:
"Your Protected Asset Limit is [insert dollar value]. You protected [insert dollar value] of assets under the long-term care partnership. You have [insert dollar value] more asset protection that you are not using."
n If the person wants to designate an additional asset for protection:
m On the Long-term Care Partnership Protected Assets form (DHS-5426C), enter the PAL and in the table on page 2 enter assets currently protected and the value currently counted against the PAL. Obtain this information from the DHS-5426D.
m Send the DHS-5426C to the client and, using DHS-3271, request that the client add the additional asset to be protected to the list of protected assets.
m Request that the client return the completed and signed DHS-5426C and verifications within 10 working days.
m When the client returns the DHS-5426C, record the value of the newly protected asset in the MAXIS STAT panel and complete and submit a Medical Assistance Lien Worksheet (DHS-3203) when the fair market value of protected real property exceeds the PAL if an asset is being only partially protected.
n If the person wished to designate unused asset protection to more fully protect an asset that is already partially protected, note the additional protection in the worker notes on DHS-5426D.
l Enter new case notes with the heading **Protected Assets LTCP** to reflect any changes.
l Redetermine eligibility for MA-LTC.
l Retain information about assets protected under the LTCP throughout the life of the case and until all claims on the estate are satisfied.
New Assets Received Between MA Renewals
When a person reports a new countable asset between renewals, determine if countable assets exceed the person’s asset limit. If the person is above the asset limit:
l Determine if the person has unused asset protection that can be used to protect the asset. There is unused asset protection if:
n Case notes state the client had unused asset protection at the last renewal.
n The Partnership policy paid benefits since assets were last reported.
l If the person has unused asset protection add the following worker comment to the denial notice:
"Your Protected Asset Limit is [insert dollar value]. Your countable assets are over the Medical Assistance (MA) asset limit. Your Long-Term Care Partnership policy allows you to protect [insert dollar value] in assets. Protected assets are not counted against the MA asset limit. Protecting an asset may help you stay eligible for Medical Assistance payment of long-term care services. If you want to protect an asset, list it on the Long-Term Care Partnership Protected Assets form when you receive it. Return the form within 10 days. Your MA will stop if you do not protect assets under the Long-Term Care Partnership or you do not reduce your assets to the asset limit."
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 LTC Partnership 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 persons 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 from the estate of the surviving spouse for the MA costs of the deceased 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.