Long-term care partnerships

Revised date
Purpose statement

The Washington State Long-term care partnership (LTCP) program is administered in collaboration between Washington State Health Care Authority (HCA), Washington State Office of Insurance Commissioner (OIC) and the Department of Social and Health Services (DSHS). It is a unique program combining private LTC insurance and special access to Medicaid. The partnership helps individuals financially prepare for the possibility of needing nursing home care, home-based care or assisted living/adult family home services sometime in the future. The program allows individuals to protect some or all of their assets and still qualify for Medicaid if their LTC needs extend beyond what is covered by their private insurance policy. Section 6021 of the Deficit Reduction Act of 2005 allows for qualified state long-term care partnerships.

WAC 182-513-1400 Long-term care (LTC) partnership program (index).

WAC 182-513-1400 Long-term care (LTC) partnership program (index).

Effective February 20, 2017

Under the long-term care (LTC) partnership program, people who purchase qualified long-term care partnership insurance policies can apply for long-term care medicaid under special rules for determining financial eligibility.  These special rules generally allow the person to protect assets up to the insurance benefits received from a partnership policy so that such assets will not be taken into account in determining financial eligibility for long-term care medicaid and will not subsequently be subject to estate recovery for medicaid and long-term care services paid. The Washington long term care partnership program is effective on December 1, 2011.

The following rules govern long-term care eligibility under the long-term care partnership program:

  1. WAC 182-513-1405 Definitions
  2. WAC 182-513-1410 LTC Partnership policy qualifications.
  3. WAC 182-513-1415 Assets that can't be protected under the LTC partnership provisions.
  4. WAC 182-513-1420 Eligibility for asset protection under a partnership policy.
  5. WAC 182-513-1425 Not qualifying for LTC medicaid if an LTC partnership policy is in pay status.
  6. WAC 182-513-1430 Change of circumstances that must be reported when there is an LTC partnership policy paying a portion of my care.
  7. WAC 182-513-1435 When Washington recognizes an LTC partnership policy purchased in another state.
  8. WAC 182-513-1440 Determining how many assets can be protected.
  9. WAC 182-513-1445 Designating a protected asset and required proof.
  10. WAC 182-513-1450 How the transfer of assets affects LTC partnership and medicaid eligibility.
  11. WAC 182-513-1455  Protected assets under an LTC partnership policy after death.

This is a reprint of the official rule as published by the Office of the Code Reviser. If there are previous versions of this rule, they can be found using the Legislative Search page.

WAC 182-513-1405 Definitions.

WAC 182-513-1405 Definitions.

Effective February 20, 2017

For purposes of WAC 182-513-1400 through 182-513-1455, the following terms have the meanings stated. See chapter 182-500 WAC and WAC 182-513-1100 for additional definitions.

"Issuer" means any entity that delivers, issues for delivery, or provides coverage to, a resident of Washington, any policy that claims to provide asset protection under the Washington long-term care partnership act, chapter 48.85 RCW. As used in this chapter, issuer specifically includes insurance companies, fraternal benefit societies, health care service contractors, and health maintenance organizations.

"Long-term care (LTC) insurance" means a policy under chapter 284-83 WAC.

"Protected assets" means assets that are designated as excluded or not taken into account upon determination of long-term care medicaid eligibility under WAC 182-513-1315. The protected or excluded amount is up to the dollar amount of benefits that have been paid for long-term care services by the qualifying long-term care partnership policy on the medicaid applicant's or client's behalf. The assets are also protected or excluded for the purposes of estate recovery under chapter 182-527 WAC, up to the amount of benefits paid by the qualifying policy for medical and long-term care services.

"Qualified long-term care insurance partnership" means an agreement between the Centers for Medicare and Medicaid Services (CMS), and the health care authority (HCA) which allows for the disregard of any assets or resources in an amount equal to the insurance benefit payments that are made to or on behalf of a person who is a beneficiary under a long-term care insurance policy that has been determined by the Washington state insurance commission to meet the requirements of section 1917 (b)(1)(c)(iii) of the act. These policies are described in chapter 284-83 WAC.

"Reciprocity Agreement" means an agreement between states approved under section 6021(b) of the Deficit Reduction Act of 2005, Public Law 109-171 (DRA) under which the states agree to provide the same asset protections for qualified partnership policies purchased by a person while residing in another state and that state has a reciprocity agreement with the state of Washington.

This is a reprint of the official rule as published by the Office of the Code Reviser. If there are previous versions of this rule, they can be found using the Legislative Search page.

WAC 182-513-1410 LTC partnership policy qualifications.

WAC 182-513-1410 LTC partnership policy qualifications.

Effective February 20, 2017

A LTC partnership policy is a LTC policy that has been approved by the office of insurance commissioner as a LTC partnership policy described in chapter 284-83 WAC.

This is a reprint of the official rule as published by the Office of the Code Reviser. If there are previous versions of this rule, they can be found using the Legislative Search page.

WAC 182-513-1415 Assets that can't be protected under the LTC partnership provisions.

WAC 182-513-1415 Assets that can't be protected under the LTC partnership provisions.

Effective February 20, 2017

The following assets cannot be protected under a LTC partnership policy.

  1. Resources in a trust under WAC 182-516-0100 (6) and (7).
  2. Annuity interests in which Washington must be named as a preferred remainder beneficiary as under WAC 182-516-0201.
  3. Home equity in excess of the standard under WAC 182-513-1350. Individuals who have excess home equity interest are not eligible for long-term care medicaid services.
  4. Any portion of the value of an asset that exceeds the dollar amount paid out by the LTC partnership policy.
  5. The unprotected value of any partially protected asset is subject to estate recovery described in chapter 182-527 WAC.

This is a reprint of the official rule as published by the Office of the Code Reviser. If there are previous versions of this rule, they can be found using the Legislative Search page.

WAC 182-513-1420 Eligibility for asset protection under a partnership policy.

WAC 182-513-1420 Eligibility for asset protection under a partnership policy.

Effective February 20, 2017

  1. The LTC partnership policy must meet all the requirements in chapter 284-83 WAC. For existing LTC policies which are converted to a LTC partnership policy via an exchange or through the addition of a policy rider or endorsement, the conversion must take place on or after December 1, 2011 unless the policy is paying out benefits at the time the policy is exchanged.
  2. You meet all applicable eligible requirements for LTC medicaid and:
    1. Your LTC partnership policy benefits have been exhausted and you are in need of LTC services.
    2. Your LTC partnership policy is not exhausted and is:
      1. Covering all costs in a medical institution and you are still in need for medicaid; or
      2. Covering a portion of the LTC costs under your LTC partnership policy but does not meet all of your LTC needs.
    3. At the time of your LTC partnership policy has paid out more benefits than you have designated as protected. In this situation your estate can designate additional assets to be excluded from the estate recovery process up to the dollar amount the LTC partnership policy has paid out.

This is a reprint of the official rule as published by the Office of the Code Reviser. If there are previous versions of this rule, they can be found using the Legislative Search page.

WAC 182-513-1425 When would I not qualify for LTC medicaid if I have a LTC partnership policy in pay status?

WAC 182-513-1425 Not qualifying for LTC medicaid if an LTC partnership policy is in pay status.

Effective February 20, 2017

You are not eligible for long-term care (LTC) medicaid when the following applies:

  1. The income you have available to pay toward your cost of care under WAC 182-513-1380, combined with the amount paid under the qualifying LTC partnership policy, exceeds the monthly private rate at the institution.
  2. The income you have available to pay toward your cost of care on a home and community based (HCB) waiver  under chapter 182-515 WAC, combined with the amount paid under the qualifying LTC partnership policy, exceeds the monthly private rate in a home or residential setting.
  3. You fail to meet another applicable eligibility requirement for LTC medicaid.

This is a reprint of the official rule as published by the Office of the Code Reviser. If there are previous versions of this rule, they can be found using the Legislative Search page.

WAC 182-513-1430 Change of circumstances that must be reported when there is an LTC partnership policy paying a portion of my care.

WAC 182-513-1430 Change of circumstances that must be reported when there is an LTC partnership policy paying a portion of care.

Effective February 20, 2017

You must report changes described in WAC 182-504-0105 plus the following:

  1. You must report and verify the value of the benefits that your issuer has paid on your behalf under the long-term care (LTC) partnership policy upon request by the agency, and at each annual eligibility review.
  2. You must provide proof when you have exhausted the benefits under your LTC partnership policy.
  3. You must provide proof if you have given away or transferred assets that you have previously designated as protected. Although, there is no penalty for the transfer of protected assets once you have been approved for LTC medicaid, the value of transferred assets reduces the total dollar amount that is designated as protected and must be verified.
  4. You must provide proof if you have sold an asset or converted a protected asset into cash or another type of asset. You will need to make changes in the asset designation and verify the type of transaction and new value of the asset.

This is a reprint of the official rule as published by the Office of the Code Reviser. If there are previous versions of this rule, they can be found using the Legislative Search page.

WAC 182-513-1435 When Washington recognizes an LTC partnership policy purchased in another state.

WAC 182-513-1435 When Washington recognizes an LTC partnership policy purchased in another state.

Effective February 20, 2017

The Washington long term care partnership program provides reciprocity with respect to qualifying long-term care insurance policies covered under other state long-term care insurance partnerships. This allows you to purchase a partnership policy in one state and move to Washington without losing your asset protection. If your LTC policy is in pay status at the time you move to Washington and you are otherwise eligible for LTC medicaid, Washington will recognize the amount of protection you accumulated in the other state.

This is a reprint of the official rule as published by the Office of the Code Reviser. If there are previous versions of this rule, they can be found using the Legislative Search page.

WAC 182-513-1440 Determining how many of my assets can be protected.

WAC 182-513-1440 Determining how many of my assets can be protected.

Effective February 20, 2017

You can protect assets based on the amount paid by your LTC partnership policy. Assets are protected in both LTC eligibility and estate recovery. If the partnership for long-term care program is discontinued, an individual who purchased an approved plan before the date the program is discontinued remains eligible to receive dollar-for-dollar asset disregard and asset protection under the long-term care (LTC) medicaid program.

This is a reprint of the official rule as published by the Office of the Code Reviser. If there are previous versions of this rule, they can be found using the Legislative Search page.

WAC 182-513-1445 Designating a protected asset and required proof.

WAC 182-513-1445 Designating a protected asset and required proof.

Effective February 20, 2017

  1. Complete a department of social and health services (DSHS) 10-438 long-term care partnership (LTCP) asset designation form listing assets and the full fair market value that are earmarked as protected at the time of initial application for long-term services and supports under medicaid.
    1. The full fair market value (FMV) of real property or interests in real property will be based on the current assessed value for property tax purposes for real property. A professional appraisal by a licensed appraiser can establish the current value if the assessed value is disputed.
    2. The value of a life estate in real property is determined using the life estate tables found at https://www.hca.wa.gov/free-or-low-cost-health-care/program-administration/determining-value-life-estates.
    3. If you own an asset with others, you can designate the value of your pro rata equity share.
    4. If the dollar amount of the benefits paid under a LTCP policy is greater than the fair market value of all assets protected at the time of the application for long-term care medicaid, you may designate additional assets for protection under this section. The DSHS LTCP asset designation form must be submitted with the updated assets indicated along with proof of the current value of designated assets.
    5. The value of your assets protected for you under your LTC partnership policy do not carry over to your spouse should the spouse need medicaid LTC services during or after your lifetime. If your surviving spouse has an LTC partnership policy the spouse may designate assets based on the dollar amount paid under the spouse's own policy.
    6. Assets designated as protected under this subsection will not be subject to transfer penalties under WAC 182-513-1363.
  2. Proof of the current fair market value of all protected assets is required at the initial application and each annual review.
  3. Submit current verification from the issuer of the LTCP policy of the current dollar value paid toward LTC benefits. This verification is required at application and each annual eligibility review.
  4. Any person or the personal representative of the person's estate who asserts that an asset is protected has the initial burden of:
    1. Documenting and proving by convincing evidence that the asset or source of funds for the asset in question was designated as protected;
    2. Demonstrating the value of the asset and the proceeds of the asset beginning from the time period the LTC partnership has paid out benefits to the present; and
    3. Documenting that the asset or proceeds of the asset remained protected at all times.

This is a reprint of the official rule as published by the Office of the Code Reviser. If there are previous versions of this rule, they can be found using the Legislative Search page.

WAC 182-513-1450 How the transfer of assets affects LTC partnership and medicaid eligibility.

WAC 182-513-1450 How the transfer of assets affect LTC partnership and medicaid eligibility?

Effective February 20, 2017

  1. If you transfer an asset within the sixty months prior to the medicaid application or after medicaid eligibility has been established, the agency will evaluate the transfer based on WAC 182-513-1363 and determine if a penalty period applies unless:
    1. You have already been receiving institutional services;
    2. Your LTC partnership policy has paid toward institutional services for you; and
    3. The value of the transferred assets has been protected under the LTC partnership policy.
  2. The value of the transferred assets that exceed your LTC partnership protection will be evaluated for a transfer penalty.
  3. If you transfer assets ((whose)) with values that are protected, you lose that value as future protection unless all the transferred assets are returned.
  4. The value of your protected assets less the value of transferred assets equals the adjusted value of the assets you are able to protect.

This is a reprint of the official rule as published by the Office of the Code Reviser. If there are previous versions of this rule, they can be found using the Legislative Search page.

WAC 182-513-1455 What happens to protected assets under a LTC partnership policy after death.

WAC 182-513-1455 What happens to protected assets under a LTC partnership policy after death.

Effective February 20, 2017

Assets designated as protected prior to death are not subject to estate recovery for medical or long-term care (LTC) services paid on your behalf under chapter 182-527 WAC as long as the following requirements are met:

  1. A personal representative who asserts an asset is protected under this section has the initial burden of providing proof under chapter 182-527 WAC.
  2. A personal representative must provide verification from the LTC insurance company of the dollar amount paid out by the LTC partnership policy.
  3. If the LTC partnership policy paid out more than was previously designated, the personal representative has the right to assert that additional assets should be protected based on the increased protection. The personal representative must use the DSHS LTCP asset designation form and send it to the office of financial recovery.
  4. The amount of protection available to you at death through the estate recovery process is decreased by the FMV of any protected assets that were transferred prior to death.

This is a reprint of the official rule as published by the Office of the Code Reviser. If there are previous versions of this rule, they can be found using the Legislative Search page.

Clarifying Information

Background Information

Section 6021 of the 2005 Deficit Reduction Act (DRA) expands LTC opportunities for States by permitting individuals who purchase a qualified long-term care partnership policy to protect assets during both the individual’s lifetime and after death in the Estate Recovery process.

The DRA provides for a unique Medicaid/private insurance model designed to attract consumers who might not otherwise purchase LTC insurance by allowing them to protect a specified level of assets. This helps both the consumer and the State by helping shift rising LTC costs from medicaid to private insurance. It also enables consumers to do estate and inheritance planning on assets they have protected under the qualified policy, since transfer of asset penalties do not apply on designated protected assets.

In Washington State, each dollar of coverage paid out by the qualified LTC partnership policy protects one dollar of assets. Insurance companies who sell long-term care policies must have the policy approved as a qualifying partnership policy by the Office of the Insurance Commissioner and must include information to that effect in the insurance documents provided to the client.

An applicant for long-term care medicaid coverage would still need to meet all other medicaid eligibility rules but are able to bank additional resources based on the amount the LTC policy has paid out. A client with a qualifying LTC partnership policy does not need to have exhausted their benefits under the policy in order to apply for medicaid, but the amount of their resources based on what the policy has paid up to the application date must be below the medicaid standard at that time.

Example
Joe resides at home and has a qualified LTCP policy with a face value of $150,000 which covers in-home care. To date the policy has paid out $40,000 in benefits. Joe has a paid for home worth $150,000 which he wants to leave to his daughter. He also has $30,000 in investment accounts and $1500 in his bank account. Joe may keep $2000 in resources and be medicaid eligible. He could choose to protect the remaining $29,500 in his investment accounts and the remainder toward his home equity. Since the policy has already paid out $40,000, Joe would be medicaid eligible before the policy benefits are exhausted. As the policy continues to pay, the amount he could protect of his home would increase each year.

How do I designate the assets I want to protect?

Individuals with a LTC Partnership Policy must submit a DSHS 10-438 LTCP Asset Designation form to Washington State Medicaid at the time of application and at each annual review in order to designate assets as protected based on the dollar amount paid for services by the LTC Partnership Policy. This will track protected assets for both LTC Medicaid eligibility and Estate Recovery purposes

Reciprocity with other states

Health and Human Services (HHS) published the reciprocity standards in the Federal Register. These are effective 1/1/2009. Provisions require:

  • Benefits paid under a LTCP policy will be treated the same by all states.
    • All States will be subject to the standards unless the State notifies the Secretary in writing of the desire to opt out.
    • All states will implement a dollar for dollar disregard
    • Policies will be treated uniformly regardless of where purchased
    • Exempt protected assets from Estate Recovery.

Washington accepts approved LTC partnership policies purchased in other states with the exception of states that originally implemented the long-term care partnership program under OBRA legislation in 1993 who did not choose the dollar for dollar asset protection model. For example, New York chose to implement a total asset protection model so policies purchased in New York since 1993 would not meet Washington State’s requirements.

Estate Recovery

Resources banked due to a qualified LTC partnership policy are not subject to Estate Recovery. This includes all or part of the value of a primary residence that is excluded for medicaid eligibility but would not be excluded from estate recovery at the time of a medicaid recipient’s death.

Applicants who need more information regarding estate recovery in Washington State may contact the Office of Financial Recovery at:

Office of Financial Recovery,
PO Box 9501,
Olympia, WA 98507-9501
1-800-562-6114.

Example #1
Mr. Jones purchased a qualified LTC partnership policy in January 2012 with a value of $200,000 as he wanted to ensure his primary residence would be passed encumbrance free to his only son. Upon application for Medicaid assistance in 2014, his other countable resources were below the $2000 limit.

The only asset he chose to protect on the DSHS 10-438 Asset Designation form was his home valued at $197,000. Over the course of the next year and a half, his LTC partnership paid out $200,000, exhausting the benefits under this policy.

Upon his death in 2016, his personal representative provided the department with an updated DSHS 10-438 Asset Designation form showing the current market value of Mr. Jones house had decreased to $175,000. This value was confirmed via the Assessor’s office. In this situation, Mr. Jones personal representative would be permitted an additional asset disregard of $25,000 of any additional assets remaining in the estate.

For estate recovery purposes, the first $200,000 of medical services provided would be exempt from estate recovery.

Example #2
Same scenario as above but shortly prior to his death, Mr. Jones took out a loan on his home encumbering the primary residence for $50,000 to give to his son to buy a house. At the time of the loan, the house appraised at $175,000 with net equity of $125,000 due to the encumbrance.

At death, although the client only has $125,000 in equity, the department would add back in the value of the $50,000 loan to determine the amount of assets protected from estate recovery. The personal representative would still only be allowed an additional $25,000 in potential asset protection and not $75,000.

Example #3
In this scenario, Mr. Jones passes away earlier than in the prior examples and his policy is still in pay status. At the time of his death, his policy has only paid out $125,000 in benefits. Although Mr. Jones designated the full value of his home as protected, at death the market value is $185,000 but since the policy only paid out $125,000, that is the amount exempt from estate recovery The State would recover on the remaining $60,000.

Worker Responsibilities

Financial staff will:

  1. Request a copy of the long-term care partnership policy
  2. Request a completed DSHS 10-438 Long-term care partnership asset designation form
    1. Part A is completed by the insurance company that has issued the policy.
    2. Part B is completed by the Medicaid applicant/recipient. This section identifies which assets the individual is requesting to designate as protected.
  3. Determine the amount of resources the client is able to designate as protected based on the dollar amount paid out by the long-term care partnership insurance.
  4. Code the protected assets on the ACES RES1 screen using code SC. Add remarks behind the RES1 screen:
    • SC = assets that are excluded based on the dollar amount paid out by a LTCP policy.
    • Total amount paid out by LTCP as of this date: ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­________________________
    • LTCP asset designation form in DMS dated: ­­­­­­­­­­­­­­­
  5. At each annual review, determine if additional assets can be protected based on the dollar amount paid out by a LTCP policy.
  6. A medicaid client may transfer protected assets, but this will reduce the total amount of assets they are able to protect based on the dollar amount of the transfer.

More Examples:

Example

Single applicant with equity interest in a home worth $200,000 and $50,000 in resources applies for long term care services medicaid.

Applicant has a LTCP policy that has paid out $100,000. The applicant is able to designate up to $100,000 in resources as protected.

Applicant is allowed to have $2,000 in resources. The home is excluded because the applicant is living in a nursing home, but intends to return home.

Applicant wants to designate $48,000 of the liquid assets as protected. The applicant wants to designate $52,000 of home equity as protected.

On RES1 screen code SC $48,000 liquid assets LTCP

On RES1 screen code SC $52,000 home equity LTCP

Remarks behind RES1:

Total amount paid by LTCP as of this date: $100,000

LTCP asset form in DMS dated xx/xx/2012

Designating $48,000 in Bank of Trust Savings Account

Designating $52,000 of $200,000 home equity

RES2 screen, code the $200,000 home and indicate PR. Add remarks behind RES2 $52,000 of $200,000 is protected due to LTCP asset designation.

Example

Same example as #1 except it is one year later at the annual review.

The LTCP policy has paid out an additional $60,000 in benefits.

The recipient of Medicaid has designated $112,000 of the $200,000 home equity as protected and $48,000 in the savings account as protected. The recipient of Medicaid has $2,000 in resources in a checking account.

On RES1 screen update SC code to $112,000 of the home equity LTCP. Add remarks behind the RES1 screen and RES2 screen with the updating information.

Long-term care Partnership information for consumers

An overview of LTC Medicaid and the LTC Partnership for consumers

Long-term care Partnership, Frequently Asked Questions

10-438 Long-Term Care Partnership (LTCP) asset designation form

Medical Coverage Information form and third party resource

14-194 Medical Coverage Information form

This form is completed when any other medical coverage exists including LTC insurance. Once completed and returned to DSHS, the system will automatically assign to the Health Care Authority Coordination of Benefits Section.

See Long-term care insurance and third party resources for additional information

Office of the insurance commissioner

Chapter 284-83 WAC Long-term Care insurance rules

Office of the Insurance Commissioner Long Term Care Partnership Program

Office of the Insurance Commissioner Long-term care insurance

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