GA Partnership

How Can It Help Protect My Assets?

April, 2006 the Georgia Long-Term Care Partnership plan was signed into law. Part of the goal is to encourage Georgia residents to plan for their later years when the need for Long Term Care (LTC) is generally the greatest. Members of the Partnership include the State of Georgia, qualified LTC insurance plans and Georgia residents. Partnership qualified LTC insurance plans enable residents to protect one dollar of personal assets for every dollar the insurance policy pays out in benefits. The amount of the “Medicaid Asset Protection” is equal to the sum of all the benefits paid under the Partnership qualified policy when the resident seeks to qualify for Medicaid. 

Is there a real need for a “Partnership Program”? First, there is a growing population of elderly. By 2030, it is projected that the number of individuals age 65 and older will be more than 71 million, almost twice the number today. Second, according to the U.S. Department of Health and Human Services, about 70 percent of individuals over age 65 will require at least some long-term care services during their lifetime. The need for long-term care is not confined solely to the aged. According to an article written for the Georgetown University LTC Financing Project, nearly 40 percent of those needing long-term care are age 40 or younger. Congenital defects and accidents are the primary causes leading to the need for long-term care in this younger age group. 

What is the cost associated with a long-term nursing care stay? A recent survey indicated that in the State of Georgia the average cost was about $6,500.00 per month or $78,000.00 per year. Residential care would be less costly at about $3,650.00 per month or $44,000.00 per year. The cost for both Nursing Home and Residential Care will increase as the demand for care soars with our aging population. LTC policies have a wide range of benefits, too many to mention in this article, designed to help you stay out of a facility. Age and health are major factors in determining the cost for a LTC plan. The average age for purchasing a LTC plan is 60 and has been dropping due to continued awareness. 

Protecting retirement assets is a major reason for purchasing LTC insurance. Qualified LTC plans offered to people 75 and younger, must offer automatic inflation protection. Qualified LTC plans also receive favorable tax treatment. Premiums paid for qualified LTC plans are tax deductible as medical expenses to the extent that the taxpayer’s total (unreimbursed) qualified medical expenses exceed 7.5 percent of annual adjusted gross income. The amount of the deduction is based on the premium and the attained age of the taxpayer. 

The Georgia Long-Term Partnership program is designed to provide Georgia resident’s additional inducement for the purchase of qualified LTC insurance. One of the largest expenses for the state is the cost for providing Medicaid long-term care for residents that spend down their assets to the minimum ($2,000). If purchased, a qualified plan that paid $200.00 per day, with a benefit period of five years, would be protecting $365,000.00 of assets that could be passed on to your loved ones. Generally, anyone with assets of at least $200,000 to $1,000,000 should consider taking action to protect these assets. Also, qualification for Medicare has a number of other requirements that need to be satisfied before the system will be available for long-term care needs. The Partnership Plan is a win/win for both the state and the residents.

If you are interested in additional information please email or call me and we can discuss!