Louisiana Commissioner of Insurance Jim Donelon and Department of Health Secretary Alan Levine today unveiled the Louisiana Long-term Care Partnership Program, which will provide Louisianians with coverage for their long-term health care needs. The program will protect residents from being forced to exhaust their assets to become Medicaid eligible if they are faced with requiring long-term care, such as nursing home care or care due to a condition such as Alzheimer’s disease.
Long-term care, which refers to services needed for those with long-term illness or disability, is not typically covered under health insurance policies, HMO plans, Medicare or Medicare supplemental policies. Medicaid does cover long-term care—as long as individuals meet federal and state guidelines for income and assets. Today, an individual would have to spend down all but $2,000 of their assets, with higher asset limits if a spouse is involved, before applying for Medicaid. The Long-Term Care Partnership Program helps prevent Louisiana residents from having to exhaust their assets in order to become eligible for the care they need. Commissioner Donelon said “The Long-term Care Partnership Program is another way to protect Louisiana consumers. Individuals who feel that they may one day need assistance with their long-term care now have an option that allows them to keep their assets and still receive the services necessary for their long-term care.”
“Providing an option for residents to purchase long-term care insurance is part of Governor Jindal’s platform to transform our state’s health care system, and I want to thank Commissioner Donelon for working with us to make this happen,” Secretary Levine said. “We have all heard stories of families who are forced to spend themselves in to bankruptcy or sell off their family’s future in order to help pay for their long-term health care needs and this partnership will help prevent that sort of thing from happening.”
Ms. Nancy McPherson, Senior State Director for AARP Louisiana, said “AARP is proud to be a member of the Coalition for Choice to Advance Long-Term Care in Louisiana. The Coalition is gratified to see these key state leaders advance an important option for long-term care that allows people to choose care in their own homes and communities. This is a choice that over 90% of our 40 million members want.”
Mr. Joe Donchess, Executive Director of the Louisiana Nursing Home Association (LNHA) said, “LNHA has been working for years to bring long term care insurance into the forefront of choices for long term care planning. We are proud to be a part of this initiative and we applaud state leaders for their forward-thinking in helping to assure Louisiana citizens’ long term care needs.”
Long-term care partnership policies pay for all costs of day-in, day-out care for those with a long-term illness or disability. These policies can cover a range of services, such as nursing home care, adult day care centers, and assisted living centers or other community facilities. They can also cover a number of in-home services, such as nursing care performed by registered nurses, licensed practical nurses, and occupational, speech, and/or physical therapists, as well as services provided by home health aides employed by licensed home care agencies.
The costs of long-term care vary. In 2008 the average cost for a semi-private room in a nursing home in Louisiana was $118 a day, $125 a day for a private room, $2,528 a month for care in an Assisted Living Facility (for a one-bedroom unit), and $69 an hour for a Certified Home Health Aide.
Pilot programs in other states show long-term care insurance partnerships have the potential to contain Medicaid spending for long-term care, or remain budget neutral. The Louisiana Department of Insurance and Department of Health have worked with the long-term care insurance industry to create the Louisiana Long-term Care Partnership Program, which allows individuals to finance their own long-term care needs as they purchase qualified, private long-term care insurance policies meeting state and federal partnership requirements.
For most people, the benefits of their private partnership insurance policy will provide all of the care they will need. Each dollar that an individual’s partnership policy pays out in benefits entitles the policyholder to keep a dollar of assets if the individual ever needs to apply for Medicaid services. Because of this unique asset protection feature, policyholders will no longer have to spend down to Medicaid eligibility levels if they run out of insurance benefits and still need care.
For example, suppose a person has an estate totaling $250,000 at age 55 and currently permitted Medicaid exemptions, such as a house, totaling $125,000. Without a long-term care partnership policy, the individual would have to spend down $123,000 of the remaining $125,000, forcing them to exhaust their assets, in order to qualify for Medicaid. However, if the individual takes out a long-term care partnership policy meeting the federal and state requirements for $125,000 at age 55, they would financially qualify for Medicaid without having to spend down their assets after using the entire $125,000 benefit in long-term care partnership policy.
Long-term care policies also include inflation protection, with the type of inflation protection varying with the age of the policyholder at purchase. This protects the consumer from rising health care costs in the future. An example of this is if a nursing home costs $100 a day currently, assuming an inflation rate of five percent that same care will cost $265 a day in 20 years.
Each of the seven insurance companies offering partnership policies as of today has its own premium rates. However, the younger an individual is when purchasing coverage, the lower the annual premium. For example, the annual premium for a Long-Term Care policy with good inflation protection can cost approximately $2,000 for someone age 65; however if the same person bought coverage at age 55 it could cost up to six times less.
Partnership policies are only marketed by licensed insurance professionals who have completed training in the state of Louisiana. Long-term care insurance companies with Partnership endorsements are approved by the Louisiana Department of Insurance. For information about the Long-Term Care Partnership Program, consumers may contact the Louisiana Department of Insurance at 1-800-259-5300 or www.ldi.state.la.us; or the Louisiana Department of Health at 1-225-342-9500 or www.dhh.louisiana.gov.