California Partnership for Long-Term Care is an innovative program of the State of California, Department of Health Care Services, in cooperation with a select group of insurance companies. Owners of these policies can shelter assets from future long-term health care costs.
The state offers many consumer protections for both insurance products and care providers. Many qualified care providers are available throughout California, but the costs are increasing due to the rising demand for care services.
A wide variety of quality care options available in California for those who require long-term health care services include:
- adult day care centers
- assisted living facilities
- continuing care retirement communities
- home health care providers
- memory care facilities
- rehabilitation facilities
- traditional nursing homes
Several insurance solutions are available to safeguard income and assets from the high costs and burdens of aging. Plus, all tax-qualified Long-Term Care Insurance policies in California have multiple consumer protections in addition to available tax benefits.
Federal Partnership Program
The California Partnership for Long-Term Care is an innovative program offered through the collaboration of the State of California, Department of Health Care Services in cooperation with a select number of private insurance companies. It was one of the four original partnership states. However, while most have reciprocity with other states' long-term-care partnership programs, California does not.
California Partnership requires that a Care Management Provider Agency, approved by the State Department of Health Care Services and independent from the insurer, provide care coordination for Partnership policyholders. Using a collaborative process, the care manager works with the policyholder, their family, and physician to complete a comprehensive assessment to determine the client’s needs and resources, and develop a detailed Plan of Care individualized to meet those needs.
Lifetime Asset Protection: This feature assures that catastrophic long-term care expenses won't reduce you to poverty even if you run out of insurance benefits. That's something other long-term care insurance policies do not offer.
Here is how this special feature works: When you need care, your California Partnership-approved private long-term care insurance policy pays for your care in the same way other high-quality long-term care policies would. However, unlike a traditional non-partnership policy, each dollar your partnership policy pays out in benefits entitles you to keep a dollar of your assets if you ever need to apply for Medi-Cal services.
For most people, a partnership insurance policy will still provide benefits for the duration of the care needed. However, if care extends beyond that point, you won't have to impoverish yourself if you run out of insurance benefits. You can apply to Medi-Cal for assistance in paying the costs of your continued care and avoid having to "spend down" your savings to the poverty level. Each dollar your Partnership policy pays in benefits for your care is protected against Medi-Cal "spend down" rules. These assets are also protected in your estate after death so your heirs are able in to inherit those assets without worry to reimbursing the state for the cost of your care.
If your California Partnership Long-Term Care policy paid $650,000 in benefits when it exhausted you would be entitled to safeguard that amount from the normal Medi-Cal spend-dow requirement.
While most states honor other states Long-Term Care Partnership Programs, California does not. This means if you move to California from another state, while you can receive benefits in California, the State of California will not honor the additional asset protection offered by the original state.
If a California resident with a partnership policy moves out of California, the partnership benefits will not be honored by any other state. All other policy benefits are good in any other state, however.
Medi-Cal, California's Medicaid program, will pay for long-term health care if an individual has little or no income and assets. The Long-Term Care Medicaid spend down is $2,000. A spouse’s minimum asset allowance is $137,400. Your spouse’s minimum monthly income allowance is $3,435. * The home equity is unlimited in California.
For more information about the Medicaid program visit www.medicaid.gov
California Medicaid Estate Recovery Program
When a person applies for Medicaid and requires long-term services and supports, their estate will be subject to the Medicaid Estate Recovery Program, otherwise known as MERP.
Under the California Estate Recovery Program, the assets subject to recovery will include your home and other real estate, bank accounts, other financial assets, vehicles, cash, and even household goods.
Remember, Medicaid (Medi-Cal in California) will provide long-term care services only if you have little or no income and assets. However, the state will never require a living spouse to move out of their home.
California must seek repayment from the estates of those who own assets at the time of death. If the deceased does not own assets when they die, there will be nothing to recover.
Recovery is limited to an estate whose assets are subject to probate and owned by the deceased at the time of death. The estate must provide a "Notice of Death" within 90 days with a copy of the death certificate.
The state may "look back" up to 60 months before application for Medi-Cal long-term care services to determine when income was reduced and resources were transferred.
If a person had a qualified Partnership Long-Term Care Insurance policy, the total amount of benefits paid by the policy would be sheltered from asset recovery.
You can learn more here - Estate Recovery California.
State Resources for Aging and Long-Term Care in California
There are a variety of state resources available to help residents and their families with issues of aging and long-term health care. Many of these services benefit low-income families.
Medi-Cal (Medicaid in California) provides many resources for those who need long-term care services and who have limited resources. In addition to paying for nursing homes, the state can provide some financial help with in-home care services, adult day care, and assisted living. Benefits include personal care, home modifications, and transportation if in-home care options are appropriate.
Thirty-three agencies across California help older people with available resources. The agency offers information and referrals on care planning and access to available government benefits.
Many programs in California are available to assist older adults and their family caregivers. The programs include Medicare counseling, legal advice, caregiver training, counseling, and respite care.
The Ombudsman assists those living in long-term care facilities and advocates for them when necessary. The Ombudsman's office can help with concerns about the day-to-day care provided and health and safety matters.
The Ombudsman's office also deals with potential concerns about abuse and violation of residents' rights and concerns about diet, quality of care, and benefits issues. The office will review and investigate reports of suspected abuse and neglect in long-term care facilities.
Older Californians who served in the military can access assistance through the California Department of Veterans Affairs (CalVet). CalVet will assist veterans access available benefits, including VA nursing home care.
California has eight VA nursing homes that provide long-term health care services for eligible veterans and, in some cases, the spouses and domestic partners.
Rate Stability Rules
In addition, California consumers enjoy additional peace-of-mind as the state has adopted Long-Term Care Insurance Rate Stability Rules. These rules, developed the National Association of Insurance Commissioners, makes it much harder for an insurance company to get an approved rate increase.
Products Approved in California
A variety of affordable products are approved in California for Long-Term Care planning including the partnership policies, traditional plans, and asset-based “hybrid” policies.
California permits the same tax deduction as is allowed for federal income tax purposes for premiums paid for the purchase of qualified LTC insurance. The federal tax incentives also apply.
Reverse Mortgages in California
Reverse mortgages are available in California. A reverse mortgage is a home equity loan where the borrower does not have to make payments.
This type of mortgage can increase monthly income, eliminate mortgage payments, and even fund Long-Term Care Insurance. However, California has many rules on these mortgage products, and you should seek the help of a qualified and licensed mortgage broker.
California law says you must be age 62 or over, occupy the property as a principal residence, and own the home outright, or have significant equity in the home. In addition, there should not be any tax liens on the property.
Many people in California have significant equity in their homes due to rising home values. This allows you to use that equity which can benefit your retirement lifestyle and reduce stress and anxiety.
Learn more about reverse mortgages by clicking here.
*The federal government sets a new minimum and maximum amounts each year, but states can set their own minimum requirements at any level between the federal limits. This information is based on the best available sources