Partnership Qualified Long-Term Care Insurance
Jason Stolz CLTC, CRPC
Partnership-qualified long-term care insurance is one of the most powerful ways to protect both your retirement assets and your eligibility for Medicaid assistance later in life. These state-endorsed programs combine private insurance coverage with public protection—allowing you to preserve more of your savings if long-term care expenses exceed your policy’s benefits.
At Diversified Insurance Brokers, we help individuals understand how partnership-qualified long-term care (LTC) plans work, how they’re different from traditional coverage, and how they can safeguard both your finances and your family’s legacy.
What Is a Partnership Qualified LTC Policy?
A Partnership-qualified long-term care insurance policy is a state-approved policy that meets federal standards for consumer protection, inflation coverage, and benefit design. When you purchase a partnership-certified policy, you gain an additional advantage: dollar-for-dollar asset protection if you ever need to apply for Medicaid long-term care assistance.
In simple terms, every dollar your LTC policy pays in benefits allows you to protect an equal dollar amount of your personal assets from Medicaid’s spend-down requirements. That means you can qualify for Medicaid without losing everything you’ve saved.
How Partnership LTC Policies Work
Here’s how the system operates in most states:
- You purchase a partnership-qualified LTC policy that includes required consumer protections, such as guaranteed renewability and inflation protection.
- If you later exhaust your private LTC benefits but still need care, Medicaid will help cover additional costs.
- The amount your policy paid in benefits is excluded from Medicaid’s asset calculation—allowing you to keep more of your savings.
This approach blends private and public coverage—creating a seamless safety net that rewards people for planning ahead rather than relying solely on government programs.
Inflation Protection and Partnership Qualification
To qualify as a partnership plan, your policy must include inflation protection that keeps benefits aligned with rising care costs. The required level of inflation protection depends on your age when you purchase coverage:
| Age at Purchase | Required Inflation Protection |
|---|---|
| Under 61 | Compound annual inflation protection |
| Ages 61–75 | Some level of inflation protection |
| Over 75 | Inflation protection optional |
Inflation protection is what keeps your policy’s daily or monthly benefit meaningful over time. Without it, a $200 daily benefit today may not be enough to cover half the cost of care 20 years from now.
Federal and State Partnership Programs
Partnership-qualified policies were created under the Deficit Reduction Act of 2005, which encouraged states to adopt uniform rules for coordinating private LTC insurance with Medicaid benefits. Today, over 40 states participate in the LTC Partnership Program, and most major carriers offer partnership-certified options.
Because each state regulates its own program, the amount of asset protection and Medicaid rules can vary. Working with a licensed advisor ensures your policy complies with your state’s requirements and provides the asset protection you expect.
Key Benefits of Partnership LTC Insurance
- Asset Protection: Keep more of your retirement savings if you need to transition from private coverage to Medicaid.
- State-Approved Consumer Protections: Policies must meet stringent guidelines for renewability, disclosures, and inflation adjustments.
- Tax Advantages: Premiums for partnership-qualified LTC policies may be tax-deductible within IRS limits. Learn more about Tax Benefits of Long-Term Care Insurance.
- Customizable Coverage: Choose benefit periods, daily limits, and elimination periods that fit your personal needs.
- Peace of Mind: Protect your estate while ensuring you have quality care options without burdening your family.
Combining Partnership LTC with Hybrid or Annuity Solutions
Some clients pair their partnership-qualified coverage with hybrid life/LTC or annuity-based LTC plans. These hybrid policies can offer additional flexibility—such as return-of-premium features or tax-free benefits under the Pension Protection Act.
For example, you can reposition an existing annuity using a 1035 exchange to fund LTC coverage. When benefits are paid for qualified care, the withdrawals become tax-free, even if the gains would otherwise be taxable. Learn more on our page: Tax Benefits of Long-Term Care Insurance.
Who Should Consider a Partnership Qualified Policy?
This type of LTC insurance is ideal for:
- Individuals with $100,000–$2 million in assets who want to protect their savings from Medicaid spend-down requirements.
- Middle-income families seeking private coverage with built-in public protection.
- Professionals who prefer to plan ahead but want to maintain flexibility and avoid losing benefits they paid for.
Example of Dollar-for-Dollar Protection
Imagine you purchase a partnership-qualified LTC policy that provides $250,000 in total benefits. If you later exhaust the policy and still need care, Medicaid will ignore $250,000 of your personal assets when determining eligibility. In other words, that same amount is “protected” for you or your heirs—allowing you to preserve wealth while still qualifying for help.
How to Verify Partnership Qualification
When reviewing options, look for a policy specifically marked as “Partnership Qualified” and verify it through your state’s Department of Insurance website. Carriers must include the appropriate disclosure language and inflation protection to earn certification.
If you already own LTC insurance, contact your carrier or agent to determine if your policy qualifies. Older policies issued before 2006 may not automatically meet partnership standards, but upgrading or adding riders may bring them into compliance.
Why Work with Diversified Insurance Brokers
We are an independent, fiduciary agency specializing in long-term care, hybrid, and annuity-based protection strategies. Licensed nationwide, our advisors help clients evaluate whether a partnership-qualified policy or a hybrid alternative is best for their goals. With access to 75+ top-rated carriers, we design plans that fit your retirement, tax, and estate objectives.
Request a Partnership LTC Quote
Learn how a partnership-qualified LTC policy can help you protect assets, reduce taxes, and coordinate with Medicaid benefits.
Related Topics to Explore
Talk With an Advisor Today
Choose how you’d like to connect—call or message us, then book a time that works for you.
Schedule here:
calendly.com/jason-dibcompanies/diversified-quotes
Licensed in all 50 states • Fiduciary, family-owned since 1980
FAQs: Partnership Qualified Long-Term Care Insurance
What makes a policy partnership-qualified?
It must meet both federal and state standards for consumer protection, including guaranteed renewability and inflation protection, and be certified by your state’s Department of Insurance.
How does partnership LTC insurance protect my assets?
It provides dollar-for-dollar asset protection. For every dollar your policy pays in benefits, an equal amount of your assets is shielded from Medicaid spend-down rules.
Do partnership LTC policies cost more?
They are priced similarly to traditional LTC policies, though inflation protection requirements can make them slightly higher in premium. The added asset protection often outweighs the difference.
Can hybrid LTC policies qualify for partnership programs?
In most states, hybrid life or annuity-based LTC plans do not qualify directly; however, they offer similar benefits and may be more flexible for estate planning.
Is the asset protection guaranteed nationwide?
Partnership reciprocity agreements exist between most states, but the protection amount and Medicaid rules vary. Always confirm your state’s reciprocity before moving or applying.
