In order to assist Ohioans with the cost of long term care and encourage them to obtain long term care policies, the Ohio Department of Job and Family Services, the Department of Insurance, and the Department of Aging, established a partnership with the Ohio insurance industry. The law is referred to as a long-term care insurance act. It is called a partnership program because it is a “partnership” between the state of Ohio and private insurance companies. Long-term care partnership policies are subject to medical underwriting so applicants can be denied. Each insurance company offering partnership policies determines its premiums based on age and health.
Depending on the policy, it can pay for nursing home care, assisted living, or home health care. If a client’s current long-term care policy was purchased on or after August 12, 2002, the insurance company must offer them exchange for a partnership policy. The client has 90 days after the offer is made to decide whether to exchange or not and exchanges are not guaranteed.
Ohio allows an income tax deduction for the cost of unreimbursed long-term care insurance premiums for federally tax-qualified plans like partnership plans. You can deduct the premiums you paid for a tax-qualified long-term care insurance plan up to certain limits.
Partnership policies benefit a person by offering Medicaid Asset Protection. This allows applicants to keep more assets and still potentially qualify for Medicaid. The total amount of assets a person may keep is the combined total of the Medicaid asset limit ($1500 for individuals and a maximum of $117,420 for couples), plus the total amount of benefit paid by a partnership policy. Medicaid can help pay the difference between what the policy covers and what is owed or pay once the policy is completely exhausted. In both cases, the policyholders get the benefit of Medicaid asset protection. The more the policy pays, the higher the asset protection. Assets that are protected by the partnership policy at the time of the Medicaid eligibility determination will continue to be protected after the death of the Medicaid recipient during the estate recovery process. Additionally, long-term care insurance can be used to pay for care in a nursing home facility while the ineligibility period runs out for sheltered assets and can also be used to give away assets and pass the 5 year look back period.
Generally speaking, individuals should consider long-term care insurance if a couple:
- owns total financial assets of at least $75,000 (not including the home or car);
- have annual retirement income of at least $25,000;
- are able to pay long term care premiums without financial difficulty; and
- if one of their major financial goals is to leave an inheritance to their children, grandchildren, or other heirs.
If you would like to know further information about long-term care insurance, please contact your insurance agent or estate planning, attorney.
NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.
James F. Contini II, Esq.
Certified Specialist in Estate Planning,
Trust & Probate Law by the OSBA
Krugliak, Wilkins, Griffiths & Dougherty Co., LPA
158 North Broadway
New Philadelphia, Ohio 44663