This article is a section taken from MA for Long-Term Care Services (MA-LTC) a part of the revisions and additions to the Minnesota Health Care Program Eligibility Policy Manual.
Long-Term Care Partnership Insurance
The Long Term Care Partnership (LTCP) insurance 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) for LTC services. It allows people to exclude assets and protect assets from MA recoveries, in an amount equal to the benefits paid out by a qualified LTCP policy as of the effective date of eligibility for MA-LTC.
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, 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 (LTCF). LTC insurance includes both individual policies and certificates issued under a group insurance contract.
Individuals Eligible for LTCP Asset Protection
To be eligible for LTCP asset protection, a person must:
- be a beneficiary of a LTCP policy that was purchased on or after July 1, 2006, or was purchased prior to July 1, 2006, but was converted to an LTCP policy through an endorsement, exchange or rider, and have been a Minnesota resident at the time the LTCP was purchased; or
- 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.
Protected Assets under LTCP
The LTCP allows a person to designate assets for protection up to the amount of benefits that had been paid out under the LTCP 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:
- 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 an LTCP 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 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 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.
- Community Spouse Asset Allowance (CSAA)
- In cases where an LTC spouse has an LTCP policy, the calculation of the CSAA 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.
- 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 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 an LTCP policy who has received MA-LTC dies, assets in the person’s estate that the person protected under the LTCP 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 an LTCP 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.
Minnesota Statutes, section 256B.0571
United States Code, title 42, section 1396p(c
CREDIT: The content of this post has been copied or adopted from the Minnesota Healthcare Programs Eligibility Policy Manual, originally published by the Minnesota Department of Human Services.
This is also part of a series of posts on Minnesota Healthcare Eligibility Policies.