Long Term Care • Partnership Programs • DRA • PQ Policies • Inflation Protection • Asset Protection
All state partnership LTC policies must be federally tax-qualified (HIPAA-compliant). The DRA of 2005 permitted nationwide expansion of partnership programs; HIPAA clarified the tax status of LTC benefits. Partnership programs require states to amend their Medicaid laws to exempt assets equal to benefits paid. New state programs under the DRA may use dollar-for-dollar asset protection only — the four original states (CA, CT, IN, NY) may continue using total asset protection. The main difference between PQ and non-PQ policies is inflation protection: compound for age 60 and under, some form for ages 61–75, offered but not required at 76+.
A PQ policy shields assets and estates from Medicaid — but not income. Asset protection is based on benefits paid at the time of application, not the policy maximum. Coverage changes are permitted under the DRA as long as inflation protection is retained. Older policies do not automatically become PQ — they must be reissued or endorsed. Agent training requires 8 hours initial and 4 hours every CE period thereafter. States submit a State Plan Amendment (SPA) to CMS to implement a partnership program.