Federal Partnership Program
The State of Maryland participates in the federal long-term care partnership program as authorized by the Deficit Reduction Act of 2005 which was signed into law by President George W. Bush. The Maryland Long-Term Care Insurance Partnership Program is an innovative partnership between Maryland and private insurance companies who issue long-term care insurance policies.
A policy sold under the Long-Term Care Insurance Partnership Program, by law, must meet the same standards as a long-term care policy not sold under the program. In addition, a partnership policy must meet certain specific federal and state requirements, and be certified as a “long-term care partnership policy” by the Commissioner of the MIA.
Partnership policies provide an additional level of protection when compared to regular long-term care insurance policies. Partnership policies permit individuals to protect additional assets from spend-down requirements under Maryland’s Medicaid program if those individuals ever need and qualify for assistance under the program.
If you received $200,000 of insurance benefits from your Partnership Policy at the time of application for Medicaid, you generally would be able to retain $200,000 in assets above and beyond the amount normally permitted for Medicaid eligibility. The Partnership Program also protects those assets after death from Medicaid estate recovery.
The asset eligibility and recovery provisions of Maryland’s Medicaid program are mitigated in these policies, so when qualifying for Medicaid, additional assets equaling the amount of insurance benefit received from the Partnership Policy can be disregard. For example, if you received $200,000 of insurance benefits from your Partnership Policy at the time of application for Medicaid, you generally would be able to retain $200,000 in assets above and beyond the amount normally permitted for Medicaid eligibility. The Partnership Program also protects those assets after death from Medicaid estate recovery.
Most states have reciprocity with other states' long-term-care partnership programs including Maryland. This means if you move from or to Maryland your partnership asset protection follows you as well.
Long-Term Care Medicaid spend down is $2,500. A spouse’s minimum asset allowance is $25,284. Your spouse’s minimum monthly income allowance is $2,057.50*
For more information about the Medicaid program visit www.medicaid.gov.
Rate Stability Rules
In addition, Maryland 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 Maryland
A variety of products are approved in Maryland for Long-Term Care planning. These include traditional plans, including partnership certified policies, short-duration policies, and asset-based “hybrid” plans.
In Maryland, there is a tax credit available if you have a qualified long-term care insurance policy. A credit is allowed against the state income tax for employers providing LTC insurance up to an amount equal to 5% of the costs incurred by the employer during the taxable year for providing LTC insurance as part of an employee benefits package. The credit may not exceed $5,000 or $100 for each employee covered.
A one-time credit is allowed per individual against the state income tax in an amount equal to 100% of the eligible federally qualified LTC insurance premiums covering the individual, spouse, parent, step-parent, child, or step-child, not to exceed $500. Federal tax incentives are also available.
*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.