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Partnership Qualified Long-Term Care Insurance FAQs
Q1. What is Virginia's Qualified State Long-Term Care Insurance Partnership?
One of the main purposes of the Long-Term Care Insurance Partnership Program is to offer government-endorsed “Medicaid Asset Protection” to consumers who buy Long-term care insurance, enabling these consumers to protect an additional dollar amount of personal assets and still remain eligible to apply for Medicaid coverage of Long-term care services.The amount protected with a Partnership-qualified policy will be equal to the sum of all benefits paid under the Partnership-qualified policy when the applicant seeks to qualify for Medicaid. The total amount of assets that a policyholder may protect as a result of a Partnership-qualified policy is above and beyond the basic allowances that a client and a client's spouse may keep under the Medicaid program. It is critical to understand that, in addition to protecting assets under the Long-Term Care Partnership program and the basic allowances that a client and a client's spouse may keep under the Medicaid program, there exist numerous other methods by which clients can protect significant assets and still qualify for Medicaid.
Q2. Why Purchase Partnership LTC Insurance?
Q3. What is Medicaid Asset Protection?
Q4. What Elder Law Issues Must Be Considered When Purchasing LTC Insurance?
If Joe and Linda had recognized this shortfall and decided to not purchase the long-term care insurance, or if they could not afford the increased premiums for the increased monthly benefit, they could instead use Medicaid assistance to help pay for Joe's nursing home costs. Most of Joe's $4,000 per month of income would normally be required to pay the nursing home expenses; Linda would keep her $700 per month. However, because Linda's income is so low, the Medicaid rules would allow Linda to receive part of Joe's income to help her with her monthly living expenses. Linda could receive a monthly maintenance needs allowance of up to $2,841 (including her income) which includes allowances for housing and utilities. Therefore, in this case, Joe and Linda would have the nursing home costs paid, and Linda would have $2,841.00 monthly for her support – more than enough for her regular needs.
The bottom line? Be sure to buy enough coverage, and be sure to buy it for the right spouse (see Answer to Question 9). It doesn't make sense to pay insurance premiums and then be bankrupted by nursing home fees anyway because of insufficient coverage. As with other medical expenses, the inflation rate in nursing home fees is currently quite high. In 10 years, the cost of the nursing homes, at the current rate of inflation, will be about twice what it is today.
Q5. How Much Coverage Do You Need?
Q6. How Do I Know If I Can Afford LTC Insurance?
Q7. How Can You Reduce the Expense of LTC Insurance?
Q8. When is the Best Time to Purchase Coverage?
Q9. Which Spouse Should Get Coverage?
Q10. What Is The Tax Deductibility Of Long-term Care Insurance Premiums?
A. State Income Tax: Under Virginia Code § 58.1-339.11, for taxable years beginning on or after January 1, 2006, any individual shall be entitled to a credit against the tax levied pursuant to § 58.1-320 for certain long-term care insurance premiums paid by the individual during the taxable year pursuant to an insurance policy entered into on or after January 1, 2006. The amount of the credit for each taxable year shall equal 15% of the amount paid by the individual during the taxable year in long-term care insurance premiums for long-term care insurance coverage for himself, but in no event shall the total credits over the life of any policy exceed 15% of the amount of premiums paid for the first 12 months of coverage. For purposes of this section, "long-term care insurance premium" means the amount paid during a taxable year for any qualified long-term care insurance contract as defined in § 7702B(b) of the Internal Revenue Code, as amended, covering an individual. If the amount of the credit as determined in subsection A exceeds the individual's income tax liability for the taxable year, the amount that exceeds such liability may be carried over for credit against the income taxes of such individual in the next five taxable years or until the full credit is used, whichever occurs first. The credit described in this section shall not be claimed to the extent the individual has claimed a deduction for federal or state income tax purposes for long-term care insurance premiums.
Q11. How Do You Know The LTC Insurance Company Won’t Go Out of Business?