York State Partnership for Long-term Care
2005 - As baby boomers’ life expectancies have lengthened,
it has become apparent that an increasing percentage of those
over age 65 will require long-term care, whether at home,
in an assisted-living facility, nursing home, or in a similar
Costs of Long-term Care
Life Insurance Company survey issued in September 2004 noted
that average daily nursing home costs for semiprivate accommodations
in New York State range from $228 in rural areas to $301
in the New York City metropolitan area. Similar outlays
for private accommodations range from $232 to $312. Costs
for private daily care range from $275 to $440. Costs for
home health aides vary. In Syracuse, the average hourly
rate is $20, ranging from $16 to $40. In New York City,
the average hourly rate is $15, ranging from $13 to $20.
The possible impact of these expenditures has resulted in
many individuals in their 40s, 50s, and 60s realizing that
their retirement planning should include long-term care
individuals or families with assets in excess of $1 million
(excluding the value of their residences), long-term care
costs might be resolved by purchasing a LTCI policy, by
paying for these costs out of current income, or by a partial
divestment of assets. For the less affluent, the possibility
that long-term care costs will greatly and directly affect
their lives is more immediate. Many individuals and families
cannot afford the financial impact. Insurance is a way to
protect against the financial impact of a catastrophic event,
in this case a catastrophic injury or long-term disability.
and families in the lower strata of income and assets are
compelled to apply for Medicaid in order to pay for medical
expenses, including long-term care. The Medicaid burden
on the federal government and the states has been enormous.
In adopting the current budget, Congress considered cutting
Medicaid funding. The states have been obliged to fund their
programs from their own resources to supplement federal
long-term expenditures for the elderly in New York are projected
to exceed $10.5 billion by 2010. In 2002, total long-term
care expenditures were more than $14 billion, of which 40%,
approximately $5.6 billion, could be allocated for long-term
New York State Partnership for Long Term Care was established
by the state legislature in September 1997 in an attempt
to manage the increasing cost of the state’s share
of Medicaid. The Partnership consisted of an LTCI policy
that by its terms obligated the state to consider the policy
benefits as full or partial payment for long-term care and
for the protection of the insured’s assets. The use
of an insurance policy was promoted by a study conducted
with funds from the Robert Wood Johnson Foundation of New
Brunswick, N.J., and recognized by Congress. Its provisions
are incorporated for Medicaid coverage, and it is designated
as Medicaid Extended Coverage (MEC). In addition to New
York, Connecticut, California, and Indiana hastened to apply
before Congress closed the program.
Partnership policy for New York protects 100% of the insured’s
(and spouse’s) assets, whereas the other three states’
programs protect only the amount of assets covered by the
policy. For example, the program, which provides for a $180-per-day
benefit (the 2005 minimum) with coverage for a minimum three-year
period, will protect 100% of a New York participant’s
assets. In the other states’ programs, only $197,100
(1,095 days) of assets would be protected.
of qualifying tests must be met for Medicaid, one of which
(for 2005) is that the applicant cannot have combined assets
in excess of $4,000 for an individual, or $5,850 for a couple,
plus $1,500 in a burial fund and life insurance. (All Medicaid
amounts mentioned in this and following paragraphs are indexed
annually for 5% compound inflation.) The value of the principal
residence of the applicant is exempt from the computation.
Monthly income is limited to a maximum of $687 for an individual
or $975 for a couple.
is also a limit for transfers of property in the period
during which the applicant makes the application. Medicaid
is permitted to “look back” for transfers of
ordinary assets during the 36-month period prior to application.
If transfers were made to a trust, the look-back period
is 60 months. Ineligible transfers during the look-back
period will delay Medicaid eligibility.
penalty period for transfer of assets is based on a “home
rate” for each county. The formula for the delay in
eligibility for qualifying for Medicaid is:
(in Months) = Amount of the Transfer/County
addition, there is a community spouse resource allowance
(CSRA) test. The assets of the community spouse (the live-at-home
spouse) are considered in the application, with an exception
for that spouse’s own retirement assets. The at-home
spouse is entitled to retain the greater of $74,820 (2005)
or 50% of the couple’s countable resources, up to
a maximum of $95,100 (2005).
test is a monthly maintenance needs allowance (MMNA), under
which the at-home spouse’s income cannot exceed $2,378
(2005). The Department of Social Services can claim 25%
of the excess to complete the required formula.
the Medicaid applicant has acquired a New York State Partnership
Insurance Policy, the asset test is waived but the income
tests are not. Therefore, the applicant’s income in
excess of the cost of care must be used for that purpose,
and the applicant would not quality for MEC.
considering the Medicaid application, a qualified attorney
should be consulted, preferably one who is a member of the
National Academy of Elder Law Attorneys, Inc. (NAELA), and
accredited as a Certified Elder Law Attorney (CELA).
complying with the act’s provisions for acquiring
an LTCI policy will qualify for MEC regardless of the value
of their assets and regardless of the type or amount of
resources they have. However, all income rules in effect
at the time of application will apply in determining MEC
acquisition of the policy will exempt the insured from the
transfer of resources penalty regulations, as stated previously.
Income for Medicaid Eligibility
purposes of determining Medicaid eligibility, income is
basically the gross amount received by the individual from
the use of that person’s assets. For example:
Annuities, IRAs, and qualified retirement plans (A single
complete withdrawal of an annuity would not be considered
Net rental income
Interest on loans and mortgages
Dividends and interest from securities
Capital gain distributions from mutual funds, regulated
investment trusts, and other trusts (Gains from the sale
of capital assets are not considered income but an increase
in asset value.)
Life insurance (Benefits are considered income in the
month received; dividends credited in policies are not
income; interest on dividends in life insurance policies
are considered income).
qualify, the New York Partnership Policy must include the
following minimum provisions:
coverage for nursing home care and home care. The minimum
coverage provisions increase each year based on a 5%-inflation
compounded basis. In addition, home care is considered on
the basis of half-days. The minimum daily coverage provisions
for the noted years are as follows:
of coverage benefit. The policy must cover a minimum
of three years of nursing home care and six years of home
care. (Each day of home care is counted as a half-day.)
Higher coverage is permissible and is recommended because
the mandated coverage minimums are much lower than actual
costs throughout most of New York.
premiums. Premiums must be level and cannot be increased
except for an application made by the insurance company
for the identical class of insureds and subject to approval
by the New York State Insurance Department.
All policies must provide for an increase in benefits
at a 5%-inflation compounded rate, except for optional inflation
coverage for those age 80 and older.
provisions. The following services must be covered:
nursing home care; home care; assisted-living care; adult
day care; personal care; and skilled nursing care.
policy must provide for 14 days annually of respite care
where an unpaid caregiver at home should be permitted to
leave and be compensated. Each policy must provide for the
coverage of two days annually for consultation purposes.
must be a minimum 30-day additional grace period for a person
designated in the application to pay the required premium
in the event the insured is unable to do so within the normal
awaiting placement in a nursing home, or for at-home services,
the insured must be reimbursed if in care status in a hospital.
policy must also provide for an adjustment in premiums or
benefits in the event of the passage of a national long-term
denial of benefits to the insured must be available for
review by the Partnership through a benefit authorization
review. If denied by the Partnership after review, the policyholder
has the right to request binding arbitration. The policyholder
has the right to use the Court of Appeals process guaranteed
under New York State Insurance Law, as well as a process
offered by the insurance company.
is strictly confidential and cannot be disclosed without
the policyholder’s permission.
coverage may be used outside of New York, MEC is valid only
for services and service providers under New York’s
Medicaid program for New York residents. A policyholder
must return to New York in order to benefit from the program’s
all Partnership policies are identical. They may vary, as
long as the basic minimum requirements are met. A particular
policy may have higher dollar amounts of benefits, shorter
elimination periods, or provide for a waiver of premiums
for home care. All policies, however, provide for waiver
of premiums for nursing-home care. A policy may also offer
optional benefits, including different nonforfeiture benefits
that return some value in the event of termination due to
discontinued payment of premiums.
Buy Long-term Care Insurance?
should consider the following benefits when determining
whether to purchase an LTCI policy:
Protection of life savings and control of one’s
Choice of location of a facility near one’s home
or, if necessary, a relative’s home;
The value placed on one’s own responsibility and
Protecting family from a disruptive requirement for the
affected individual’s personal care; and
In light of all of the above, peace of mind.
Should Consider the New York Partnership Policy?
public is becoming increasingly aware that an LTCI policy
is an integral part of the financial planning process. The
following types of individuals should especially consider
the New York Partnership Policy:
Middle-aged individuals that are generally healthy;
Single persons having a total annual income of $30,000
or greater, and assets, not including their home, of at
Married persons having total income of at least $40,000,
and assets, not including their home, of at least $140,000.
income should be sufficient to pay for long-term care and
can be a guide in determining the amount of insurance coverage.
Consider that the average annual premium for an average
base Partnership policy in 2004 was as follows:
age 35: $ 940
At age 40: $ 954
At age 45: $1,074
At age 50: $1,234
At age 55: $1,463
At age 60: $1,884
At age 65: $2,478
At age 70: $3,265
At age 75: $5,269
York State Partnership policy premiums are deductible as
medical expenses for federal tax purposes, although in some
instances only on a limited basis because of federal regulations.
Beginning with the 2004 tax return, New York has enacted
a 20% tax credit in lieu of the limited federal deduction.
here to see the Exhibit.
Mandel, CPA, PFS, George Mandel Associates, Inc.,
White Plains, N.Y., is a licensed insurance agent in New York
and other states. He is a member of the NYSSCPA’s Employee
Benefits and Estate Planning Committees.