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Long-Term Care Insurance Partnerships in Tennessee
Dec. 5, 2008
The Deficit Reduction Act of 2005 (DRA) made a myriad of changes to long-term care policies and services under the Medicaid system. We have outlined the details of the program and how consumers benefit from it.
One of the major changes of the DRA relates to long-term care partnerships. The DRA now allows all states to establish partnership programs. As allowed under the DRA, the State of Tennessee has amended its state plan (effective October 1, 2008) to provide for a qualified State Long-Term Care Insurance Partnership. We have outlined the details of the program and how consumers benefit from it.
What is the Long-Term Care Insurance Partnership?
The Long-Term Care Insurance Partnership (LTC Partnership) is a joint collaboration between the federal Medicaid program and long-term care insurers. The LTC Partnership in Tennessee involves private LTC insurers, LTC insurance producers (agents and brokers), the Bureau of TennCare, the Department of Human Services and the Department of Commerce and Insurance (the "Department").
In order to participate in the LTC Partnership program, an individual must have purchased and received benefits from a "qualified" LTC Partnership policy. If an individual has a qualified LTC Partnership policy and has received benefits under the policy, then LTC Partnership benefits are not counted when determining the individual's TennCare/Medicaid eligibility and will not be recovered during estate recovery when the individual dies. In short, for every dollar that a qualified LTC Partnership policy pays in benefits, a dollar of personal assets can be protected from estate recovery and will not be counted when applying for coverage under the TennCare/Medicaid program.
What is a "Qualified" LTC Partnership Policy?
In order for a LTC Partnership policy to be considered "qualified", the policy must meet ALL three of the following requirements:
- The policy must have the same provisions as set forth in the National Association of Insurance Commissioner's model law; all plans sold in Tennessee must comply with the model and be approved by the TDCI before their use.
- The policy must be tax qualified, which means that the Internal Revenue Service does not tax the policy's benefits.
- The policy must contain the following inflation protection provisions at the time it is sold:
- (a) Less than 61 years old – The policy must have compound annual inflation protection at some level.
- (b) Ages 61 through 75 – Some level of inflation protection must apply. No minimum level is established.
- (c) Over 75 years old – Policy may provide inflation protection, but none is required.
Will consumers be permitted to exchange their existing long-term care policies for a policy meeting the qualified LTC Partnership policy requirements?
It depends. Only those individuals who currently own a long-term care insurance policy purchased on or after February of 2006 that would otherwise meet the LTC Partnership policy requirements may exchange their policy for a LTC Partnership policy.
May an individual purchase a qualified LTC Partnership policy from any insurance company?
No. Only insurance producers meeting certain requirements are eligible to sell qualified LTC Partnership policies. Insurance producers must first receive a license from the Department to sell accident and health or sickness and life insurance products. Additionally, producers must complete a TDCI-approved course outlining long-term coverage and an additional set number of hours of continuing education.
Will the State of Tennessee recognize qualified LTC Partnership policies purchased in another state?
Yes. The Bureau of TennCare will recognize qualified LTC Partnership plans purchased in other states.
Will an individual be required to exhaust the benefits under a qualified LTC Partnership policy before being allowed to apply for benefits under TennCare/Medicaid?
No. Once an individual meets the eligibility requirements for TennCare/Medicaid, he or she may receive long-term care Medicaid coverage, even if there are unused benefits under the LTC Partnership policy.