Medicaid Eligibility Issues for Long-Term Care Insurance Partnership Programs

Medicaid is the primary source of long-term care expenses for people with low incomes or reduced assets from health care spending. The Long-Term Care Insurance Partnership model, developed in the 1980s, encourages middle-income people to buy private long-term care insurance, which helps delay or avoid the need for Medicaid.

The insured are subject to special Medicaid eligibility rules that allow a specific amount of their assets to be disregarded when benefits are assessed. This issue brief discusses the eligibility rules that states must consider when implementing a partnership program, many of which came into effect with the Deficit Reduction Act of 2005.

Key Findings:

  • A penalty incurred for transferring assets to gain Medicaid.
  • Income eligibility and value of home equity eligibility (anyone with home equity over $500,00, in most states, is not eligible).
  • Qualified income trusts that allow a person to divert excess income into a trust.

The author also discusses whether an insured person could be eligible for Medicaid before exhausting their insurance benefits and whether there are any limits placed on the types of paid-for services. The policies outlined in this brief could influence how long-term care planning develops across states.