Legislative Update – Long-Term Care Partnerships

The Texas Department of Insurance will be having a hearing August 12 to discuss proposed rules concerning Long Term Care Partnership policies. These policies became approved when Senate Bill 22 passed during the last session. TDI has been working diligently on the rulings and procedures to allow these policies to be issued in Texas.

The hearing will be webcast at http://tdi.state.tx.us/ general/events.html.

Long Term Care Partnership policies would allow a person to qualify for Medicaid after the policy benefits expire, yet not be entirely financially penalized in order to qualify.

In its broadest concept a person would purchase a policy of some quantifiable benefit – ie. set number of years, set amount of benefit per day, etc. If the person goes on claim, uses the policy benefits completely, and then must call on Medicaid for continued care, then the assets of that person roughly equal to the policy’s total payout would be exempt from Medicaid qualifications. This helps prevent the total impoverishment of the insured who took the initiative to purchase this needed coverage for themselves. In the event that they outlast the policy benefits, they are rewarded for their good decision by not having to spend down their entire estate to continue care.

Partnership policies have been in force in four states for several years. In those states the effect of the policies has been significant. Policy sales as a whole have been up, and larger numbers of buyers were under age 65.

The effects to those states’ Medicaid budget has been felt too. Of those partnership policies that went to claim, less than 3% of policy-holders exhausted their benefits and went on Medicaid. Many of those policy-holders may not have purchased Long Term Care if not for the partnership provision.

Though premiums vary state to state, LTC Partnership policy premiums have been less costly than standard policies. This trend should hold true in Texas as companies begin to design policies around this partnership program.

Policies in other states have also been tax-qualified, and likely will be so in Texas. As the rules and regulations become firm FWAHU will keep you up to date on the progress of the LTC Partnership Programs in Texas.

If you would like an electronic copy of the 260 page proposed LTCI rules, please contact Kasey Buckner at 817-379-9323.

-Kasey Buckner, FWAHU Legislative Chair 2008-09