Florida Long-Term Care Partnership in 2017

Florida State Incentives for Long Term Care Insurance

Updated April 2017

This Florida state program can save you hundreds of thousands of dollars if you need extended Long Term Care services.  Few people are aware of it, here's what you need to know. 

Florida has a growing population of both working and retired baby boomers who have assets to protect. After federal legislation built the framework in 1996, states were allowed to design Partnership Programs to protect state residents assets.  The state of Florida has determined that the best solution to the funding crisis for Long Term Care is a combination of private long term care insurance and a backstop of public assistance in the rare cases that private insurance is not enough.

Why Partnership?

The State of Florida seeks to incentivize state residents to purchase Long Term Care Insurance.  The idea is to lessen dependence on state Medicaid services (reserved for the impoverished) by allowing private insurance plans to pay the bulk of most people's Long Term Care costs, while allowing for state assistance should you be unlucky enough to exhaust all of the benefits in your LTC insurance policy.

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The Demise of the Medicaid Planning Industry
The Federal Deficit Reduction Act of 2005 sought to limit wealthy individuals' ability to transfer assets to other parties and "self-impoverish" themselves.  Prior to Federal action, there was a burgeoning industry that revolved around manipulating our social safety net for the benefit of the wealthy.   There were many private individuals who had assets quickly moving those assets to other parties and then qualifying for state welfare assistance through Medicaid.  The Deficit Reduction Act of 2005 requires a five-year "look back" period to prevent asset transfers from occuring within five years of requesting state assistance.

Asset Protection: Dollar for Dollar
Once you have a qualified LTC insurance policy, your asset protection is available as soon as the first claim is paid.  The state will disregard your assets in a dollar-for-dollar fashion by looking at what your policy has paid out to date.  The advantage to policyholders is that what would normally be considered a smaller LTC policy can now provide enhanced asset protection.  For example, a benefit of $109,500 would be considered minimal coverage for many people, but with Partnership benefits considered, it could also shield $109,500 from Medicaid consideration beyond an LTC claim, in essence doubling the monetary benefit of a smaller policy.

Qualifying for LTC Partnership Status
You must be a Florida resident at the time of purchase, and your policy must be purchased after January 1, 2007.  You may also be required to purchase inflation protection.  This table breaks down State Requirements by age:

Age at Issue LTC Partnership Requirements
Under Age 61 Compound Inflation Protection Required
Age 61-75 Compound or Simple Inflation Protection Required
Age 76+ No Inflation Protection Required

 

Caveats To Consider
Increasingly, shoppers are finding increased value in policy designs that may have "Guaranteed Purchase Option" inflation benefits, which do not qualify for Partnership status unless you are over age 76 at time of purchase.  You may be able to buy significantly more benefits upfront by skipping inflation protection, at the risk of not having Partnership.

More importantly, the Partnership program does nothing to address Medicaid income requirements.  While the normal asset limit in Florida is $2,000 as of 2015, there are also income limits.  If you're wealthy enough to consider LTC insurance, you may have enough income to disqualify from Medicaid benefits, rendering the Partnership asset disregard useless.  

In short, "Medicaid" is not in many policyholders' vocabularies.  The program, however, can save you hundreds of thousands of dollars in a worst-case scenario.

Supplemental Information

Additional information on Florida Long-Term Care Partnership in 2017.

Did You Know?
For most people, Florida requires that inflation protection be purchased with your LTC policy.


Group Plan Warning
Many group Long Term Care plans do not include automatic inflation protection. Instead, they will use terms like "Guaranteed Purchase Option" or "Future Purchase Option" which is not qualified for FL Partnership.


2015 Update: Many companies in Florida have begun to offer "Step Rated" inflation protection. Transamerica and John Hancock are notable examples. Check with your agent or the company to find out if your quoted plan qualifies for Florida's guidelines for Partnership Eligibility.

 

"I was concerned I may not qualify due to some arthritis treated by medications. Once I spoke with LTC Tree, I felt like I had a plan of companies that would accept me. Two months later, my application was approved and after a short Q&A with my agent I sent in the premium and put coverage in force. All is well.

Don B., Ft Myers Florida

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