Asset Protection 510-05-66-10

(Revised 7/1/09 ML #3183)

A Partnership Policy provides asset protection by allowing individuals to protect additional assets if assistance under Medicaid is ever needed. Specifically, Medicaid disregards an additional amount of assets equal to the amount of insurance benefits received from the Partnership Policy.

Example: If an individual receives $200,000 of insurance benefits from a Partnership Policy, the individual generally will be able to retain $200,000 of assets above the amount of assets normally permitted for Medicaid eligibility. (An equal amount of assets are also protected from Medicaid estate recovery.)

The asset disregard applies to all insurance benefits received from a Partnership Policy, regardless of whether the insurance benefits are for long-term care related costs that would not be covered by Medicaid (i.e. benefits paid for assisted living). The asset disregard as of any date equals the insurance benefits that have been received to that date, or are due but not yet paid from a Partnership Policy, even if additional insurance benefits may be received in the future from the Partnership Policy. (The asset disregard, however, does not include return of premium payments made upon the termination of a Partnership Policy (due to cancellation or death) since such payments do not represent insurance benefits.)
With regard to married individuals, the asset disregard applies to both spouses, regardless of which spouse actually received the insurance benefits.

Example: Mr. and Mrs. Smith have a joint Partnership Policy that will pay up to $200,000 in benefits for either of them. Mrs. Smith enters long-term care and uses up $180,000 in benefits before she passes away. Eventually, Mr. Smith enters long-term care. His care is covered by the Partnership Policy for another $20,000. The policy then ends because it has paid a total of $200,000 in benefits. When Mr. Smith applies for Medicaid, he is allowed a disregard of $200,000 in assets in addition to his $3,000 asset level.

In the above example, if the Partnership Policy only covered Mrs. Smith (Mr. Smith was not covered under the policy), the disregard would still be allowed for Mr. Smith, but the disregard would only be $180,000 as that was all that was paid by the policy.

Example: Mr. and Mrs. Brown each have their own Partnership Policy that will pay up to $200,000 in benefits. Mrs. Brown enters long-term care and uses up $150,000 in benefits from her Partnership Policy before she passes away. Eventually, Mr. Brown enters long-term care. His care is covered by his own Partnership Policy up to the maximum $200,000 his policy provides. The policy then ends and Mr. Brown applies for Medicaid. He is allowed a total disregard of $350,000 in assets in addition to his $3,000 asset level ($200,000 from his policy and $150,000 for Mrs. Brown’s policy).