As we and our family members age, the prospect of needing and paying for long-term care services looms large in our futures. Of the options available, many of us should contemplate whether a Long-Term Care Insurance Partnership Policy would be beneficial and, perhaps, provide peace of mind.

Long-Term Care Insurance (LTCI) policies provide coverage for skilled care services needed later in life. Premium schedules depend on the applicant’s physical and medical history and benefits can be designed to pay for a certain number of days of care, a certain dollar amount per day, or a total dollar amount. Generally, policies start paying for care when specific criteria are met—such as the insured requiring assistance with two or more “activities of daily living” (ADLs) like dressing, eating, personal hygiene, using the bathroom, walking, and transferring oneself (i.e.: from sitting to standing or other positions).

To maximize the appeal and benefit of LTCI, Nevada took advantage of an option provided by the Deficit Reduction Act and created the State’s Long-Term Care Partnership Program. This is a public-private partnership aimed at promoting LTCI while reducing Medicaid expenditures for long-term care services. The Partnership Program creates incentives for Nevadans to fund their care needs privately through purchasing qualified Long-Term Care policies and to rely on the policy’s insurance benefits before accessing Nevada’s Medicaid program. Using Partnership Policies can be a smart way to plan for future long-term care costs.

Partnership Policies in Nevada allow an asset disregard if and when the policyholder applies for Medicaid services. The State may disregard the policyholder’s assets equal to the amount paid out under the qualifying insurance policy when determining Medicaid eligibility. This comes into play when the individual requires continued skilled care, but has exhausted benefits under the Partnership Policy. For instance, if a qualifying plan paid out $200,000 in benefits to cover a person’s long-term care needs, Medicaid would not count up to $200,000 of assets when determining whether that person was eligible for Medicaid assistance in paying for long-term care costs.

As a result, the Partnership Plan policyholder could qualify for long-term care assistance through Medicaid without being forced to completely spend down assets to satisfy Medicaid’s income and asset limits. Given the 2016 asset and resource limits of $119,220 for a married couple, and the very low $2,000 asset limit for an individual, the interplay of a Partnership Policy may allow Nevadans to retain significant assets and resources. It is important to remember, however, that buying a Partnership Policy does not guarantee Medicaid coverage, as other eligibility rules still apply.

To be a qualified Long-Term Care Insurance Partnership Policy, the policy itself must include very specific features and the person owning the policy must be a Nevada resident at the time coverage becomes effective. At Kling Law Offices, we would be happy to consult with you about long-term care planning and whether LTCI is a product that would help give you the peace of mind you deserve.

For Medicaid purposes, a “gift” is an uncompensated transfer of assets or the transfer of an asset for less than its fair market value. Some things that you may not think of as a “gift” may be treated as such by Medicaid. This may significantly affect Medicaid eligibility if the transfer is made during a look-back period.

Presently, there is a 5-year “look-back” period, during which the government will examine all transfers of assets in assessing the Medicaid applicant’s financial status. Any gifts or asset transfers during this 5-year period could result in the imposition of a penalty period during which the applicant would be ineligible to receive Medicaid benefits.

Examples of some transfers that Medicaid will treat as a gift include:

• Withdrawals by a joint account-holder from a joint bank account.
• Putting the title to a house into joint names with someone else.
• Buying certain kinds of annuities – the law has become complex in this area, so some purchases will not trigger a penalty, but many will.
• Lending money if the promissory note does not meet certain criteria, or if the applicant forgives the loan in a Will.
• Failure by the applicant to take the “statutory share” of the estate of his/her spouse – to “elect against the Will.”
• Distribution from a living trust established by the applicant or spouse upon the death of either one, if the other person requires long-term care.
• Disclaimer of an inheritance.
• Buying a “life estate” if the applicant does not live in the property for at least a year.
• Selling something below fair market value.
• Any transfer made by the applicant’s spouse before Medicaid is awarded may be treated as if it were made by applicant. (Special rules apply if both spouses require long-term care.)
• Transfers made on behalf of either spouse by a Conservator, under power of attorney, etc., will be treated as if made by the applicant.
Many asset transfers, including some outright gifts, have innocent explanations and the Medicaid applicant can attempt to prove that the transfer should not result in a penalty period. For instance, if the applicant can establish the gift was not made for purposes of Medicaid planning then it should not cause a penalty. If the applicant made a gift when living independently, within his/her means, while in reasonably good health, and for reasons that can be established, even a significant gift may be allowed without the imposition of a penalty. As one might expect, the burden falls upon the applicant to present convincing evidence that the asset was transferred exclusively for some reason other than to become eligible, or to retain eligibility, for Medicaid

If you or a loved one anticipates relying on Medicaid for long-term care, planning ahead can provide options to preserve assets and expand your choices. We would encourage contacting our office for a complimentary consultation that will help you plan for the peace of mind you deserve.