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Author: Rayvt Big gold star, 5000 posts Top Favorite Fools Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75528  
Subject: Re: Big Problems wth LongTermCare Insurance Date: 7/12/2013 12:54 PM
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Either one (or both!) of us is confused, or we are talking about different things.

These policies don't provide any money, they just raise the floor on the amount of assets you have before you are allowed to go onto Medicaid.

I'm trying to see how this would work out, and while it's better than nothing, it doesn't seem to provide a whole lot of actual value.

A family with $2M+ doesn't even need LTCi, since they can afford to pay for it out of pocket.

So let's say they have $1M, and one spouse has an ongoing need for LTC. At $300/day for 5 years, their ~$500,000 policy is exhausted, so they have to pay themselves.
They use 500K of their 1M for the next 5 years, leaving them with 500K.
Now the Partnership policy kicks in and that spouse is allowed to go on Medicaid. They get moved from their $300/day care facility to one a lot worse. "you would only receive those services provided by Medicaid in Medicaid approved facilities."

To me, that's a big kicker. Even though your assets are "protected" the ill spouse doesn't get to stay in the nice full-service facility. They must go into a (low level of service) Medicaid facility.
Perhaps they aren't all hell-holes, but the ones I've personally seen are pretty close.

So, the well spouse gets to keep the $500K or $1M of assets (Ind says any policy over $300K protects unlimited assets). But the ill spouse gets dumped into a Medicaid facility.

Your link says, "The average cost of nursing home care in Indiana is more than $70,000 a year". Expensive, yes. But $1,000,000 at $70,000/yr will last for 15 years. Again from the link, "The average length of stay in a nursing home is 2.6 years."

It looks to me like the only group of people where a Partnership policy has any meaningful benefit is people who are have some assets but not a lot. Maybe around $200K-$500k. Their only option is to end up in a Medicaid home. No matter what, they are going to be in a Medicaid in short order. The Partnership policy lets the well spouse keep enough assets to keep them out of poverty.
Poor people, of course, don't enter into the picture. They can't afford LTCi and they don't have any assets to protect from Medicaid.

-the end-
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