Retirement Security Project

The Long-Term Care Partnership Program: Issues and Options

Introduction

There is an ever-present tension in the financing of long-term care (LTC) in America over what share of the burden private or public sources should bear. A significant proportion of LTC is provided on an informal basis by family and friends, or paid for outof- pocket. However, as family structures change, the Baby Boomer generation retires, and the intensity and cost of care have increased, demand has grown for insurance coverage of such services, especially for seniors. Medicare does not pay for most LTC services and access to Medicaid is restricted to low-income individuals. Yet, because the cost of LTC impoverishes many seniors, Medicaid pays for a majority of formal LTC services. Budget constraints at the state and federal level, however, make it unlikely that government will assume additional financing responsibility in the short run. Policy makers are instead turning toward private-sector solutions, such as increasing the number of people buying LTC insurance through incentives like tax-credits.

In this context, one idea being promoted is the expansion of the LTC Partnership Program. Started as a demonstration and limited to four states, the Partnership combines private LTC insurance with special access to Medicaid for those exhausting their insurance benefits. The idea is to encourage citizens to purchase a limited, and therefore more affordable, amount of LTC insurance coverage, with the assurance that they could receive additional LTC services through the Medicaid program as needed after their insurance coverage is exhausted. In addition, participants can access Medicaid without having to spend down all of their assets (although income must be devoted to LTC) to levels typically required in order to meet Medicaid eligibility requirements. Bipartisan support in Congress and among governors has emerged to allow all states to create such partnerships. Yet, concerns about the program's effectiveness and implications remain.

This issue brief examines the LTC Partnership Program, reviewing its design, implementation, and outcomes to date and identifying questions that should be considered in expanding the Partnership.

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