The State of Texas has come out with a new plan to incentivize Long Term Care insurance to their residents. This will reduce the burden on the government run plans and protect people if they use up their insurance coverage. There are benefits to the Qualified-Partnership Plans, but many restrictions as well. It is important to read the fine print when it comes to any insurance plan.
The government of Texas wants to help protect the hard earned savings of its residents. For every dollar that they spend on a qualified partnership plan the State will set aside a dollar towards qualifying for Medicaid. So if you receive $10,000 in benefits then $10,000 dollars of your estate is protected should you need to use Medicaid benefits down the road. A qualified plan does not automatically qualify you for Medicaid.
All Partnership Plans must offer inflation protection. The costs of Long Term Care insurance can change over time. As companies react to the changing demand for long term care customers may experience a shift in their pricing. All participants under 76 must purchase inflation protection with their qualified Texas Partnership Plans. Past the age of 76 residents will have the option of purchasing inflation protection, but it will no longer be mandatory.
The premiums are tax deductions and the benefits are not taxable as income. This is how it should always be, unlike many forms of insurance Long Term Care insurance is a health expense. However, non-qualified policies are not tax deductions.
There is a “Reciprocity” agreement in place for policy holders who leave the State of Texas. Many other States are participating in this agreement. In order to qualify you have to qualify for Medicaid in the other State. Here is a map of participating States.
Not every insurance company can provide these Qualified-Partnership Plans and not every plan is a qualified plan so be sure to check your policy.
Here is a link to the qualified companies.
There are also different rules for qualified plans regarding triggering benefits, Plan of Care requirements, and qualifying for benefits with cognitive impairment. “Medical Necessity” cannot be used to trigger benefits if you use a Qualified-Partnership Plan. For Cognitive Impairment there must be proof of a need for “substantial supervision.” In order to qualify there must be a need for assistance with at least 2 daily tasks. These restrictions come from the Federal laws that brought these programs to life. There are non-qualified plans that people can purchase that do not have these requirements attached.
Group Plan Warning
Many Texas-approved group Long Term Care plans do not include automatic inflation protection. Instead, they will use terms like "Guaranteed Purchase Option" or "Future Purchase Option" which is not qualified for TX Partnership.
"One weekend I was at a friend's house and their ownership of a Long Term Care plan came up. I wanted to quickly research my options, and called LTC Tree. We found a plan that worked and I applied and was approved in about six weeks. As a former financial consultant, this decision made sense to me.
Robin B., Houston Texas