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Monday, August 3, 2015

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Important!

Changes in Minnesota Long Term Care Partnership take effect July 1, 2015

The 2015 Minnesota legislature made three changes to the Minnesota Long Term Care Partnership program that became effective on July 1, 2015.

The minimum inflation protection percentage was changed from 3% to 1% for a long-term care insurance policy to qualify as Partnership. This applies to policies sold on or after July 1, 2015. (Laws of Minnesota 2015, Chapter 59)

1. A long-term care policy that was issued before July 1, 2006 that otherwise meets all requirements for Partnership policy status will be considered qualified as a Partnership policy as long as no benefits have been paid out on the policy. (Laws of Minnesota 2015, Chapter 59)

2. For policies sold before July 1, 2006, a policyholder can make a written request to the issuer of the long-term care insurance policy to find out if the policy meets the requirements for a Partnership qualified policy.

3. For policies sold before July 1, 2006, the issuer of the policy must reply to the written request within 30 days. If the policy does qualify as Partnership, the issuer must add a rider, amendment, or disclosure statement to the policy to provide documentation of the Partnership policy status. (Laws of Minnesota 2015, Chapter 59)

Minnesota Long Term Care Partnership

It is a unique program that combines certified private long-term care insurance policies and Medical Assistance (MA). Under the Minnesota Long Term Care Partnership, a person who buys and uses a Minnesota Long Term Care Partnership policy to pay for their long-term care can protect their assets, if they later need to apply for MA to help pay for long-term care services.

Minnesotans who do not have a Minnesota Long Term Care Partnership policy may qualify to have the state pay for their long-term care through the state’s MA program, but only if their income and assets are at or below the MA asset limit, which is a low dollar amount. This means they must first use their own income and assets to pay for their care before MA could begin paying. Once on MA, a person can keep only some of their income for personal needs and for supporting certain family members, but must use the rest of their income to pay for their care.

Generally, to receive MA payment of long-term care, an individual’s counted assets must be at or below the MA asset limit. In most instances, the counted asset limit is $3,000. An individual’s personal residence and vehicle are usually not considered countable assets and therefore do not count towards the $3,000 asset limit. The Minnesota Long Term Care Partnership allows a person to protect assets beyond the $3,000 amount.

Medical Assistance

Medical Assistance is Minnesota’s version of Medicaid, a program jointly funded by both the state and federal government. It provides health care services, including long-term care to people who are eligible. In order to qualify for MA, an individual’s income and countable assets must be at or below certain limits.

What qualifies as a Minnesota Long Term Care Partnership?

Unlike Partnership programs in other states, Minnesota’s program does not require minimum or maximums coverage dollar amounts. To be certified as a Minnesota Long Term Care Partnership™ policy, it must:

  • • Meet the requirements for being “tax qualified” as defined in Section 7702B(b) of the Internal Revenue Code
  • • Meet certain consumer protection requirements in Section 6021(a)(1)(B)(5)(A) of the Deficit Reduction Act, which are taken from the NAIC model act of 2000
  • • Provide coverage to a person who was a Minnesota resident when coverage first became effective
  • • Provide inflation protection if the person is under age 76:
  • • If a policy is sold to a person under the age of 61, it must provide compound annual inflation protection, which must be continued until at least age 66 to maintain partnership status.
  • • If a policy is sold to a person between ages of 61 and 75, the policy must provide some inflation protection, which must continue for the first five consecutive years following the date of purchase, or until age 76, whichever occurs first, to be considered a certified Minnesota Long Term Care Partnership™ policy.
  • • After the first five years, a policy sold to a person between the ages of 61 and 75 may, but is not required to, provide inflation protection to maintain partnership status.
  • • Inflation protection for a Long Term Care Partnership policy may not be less than three present per year or a rate based on changes in the Consumer Price Index. The Commissioner may approve other types of inflation protection that comply and further the goals of the Partnership program.
  • Further details are contained in the Inflation, exchange and notification bulletin issued 10/8/07.

    Deciding what you need

    The Minnesota Board on Aging Senior LinkAge Line® can help people sort out their long term care options. The Senior LinkAge Line® is designated to provide Minnesotans with free, comprehensive, neutral information and assistance about Medicare and long term care options counseling, including the Minnesota Long Term Care Partnership program. Call 1-(800) 333-2433 or have a live chat with a specialist at www.MinnesotaHelp.info®.

    The table below can help a person decide if a Minnesota Long Term Care Partnership policy could be a good option to help pay their long-term care expenses. The table can also be used to decide how much coverage to buy when purchasing a Minnesota Long Term Care Partneship policy. For additional information, please visit longtermcare.gov.

      Daily rate nursing home, private Daily rate nursing home, semi-private Monthly rate, assisted living facility Hourly rate, home health aide Daily rate, adult day services Hourly rate, home-maker services
    U.S. average $229 $205 $3,293 $21 $67 $19
    Minnesota median $243 $228 $3,403 $26 $72 $23
    Twin Cities Metro area $260 $245 $3,559 $28 $79 $26
    Rest of Minnesota $230 $209 $3,164 $20.50 $61 $20.50

    Source: 2014 Genworth Cost of Care Survey

    Source: U.S. HHS, 2010, longtermcare.gov

    Insurers selling coverage

    About 12 insurers sell individual Minnesota Long Term Care Partnership policies. To sell partnership coverage, insurers must have their policy filings certified by the Minnesota Department of Commerce. To view the list of current companies selling policies, go to MinnesotaHelp.info® and search Long Term Care Partnership insurance companies.

    Researching an insurer or agent

    If a person wants to find more information about an insurance company, does not have an insurance agent and wants to find one or find license information about a current agent, go to the MN Department of Commerce License Lookup . You can also check to see if the state has taken any negative actions against a company or an agent. Some financial rating institutions, including A.M. Best and Moody’s, provide free, online ratings information about the companies. Ratings by other institutions, including Standard and Poor’s, Fitch, and Weiss, may be available for purchase or through a library. This information is used to review the financial health of the insurance company.

    Resolving a dispute

    If you find yourself in a dispute with an insurer or agent and are unable to resolve it yourself, the Minnesota Department of Commerce may be able to help. Visit Insurance Complaints, or call 1-800-657-3602.

    Moving to another state

    A number of other states have implemented Long Term Care Partnership programs or are in the process of developing them. The federal government has developed a national reciprocity agreement for all states participating in the partnership program. A person who has purchased a partnership policy in one state can receive asset protection when applying for Medical Assistance (Medicaid) for long-term care in another Long Term Care Partnership state with which the first Long Term Care Partnership state has a reciprocal agreement. See Reciprocity agreements for Long Term Care Partnership states.

    Tax implications

    Federal: If a person itemizes deductions on their federal return, they may be able to deduct premiums for federally tax qualified long-term care insurance policies if their total medical care expenses exceed 10% of their adjusted gross income, if under the age of 65. There is a temporary exemption through December 31, 2016 that allows people age 65 or older to deduct their premiums, if total medical expenses exceed only 7.5% of the adjusted gross income.

    There is a limit on the amount of the long-term care insurance premium that can be deducted, depending on the age of the taxpayer at the end of the year. Below is a table of the amounts for 2015. Any premium amounts paid for the year above these limits are not considered a medical expense and cannot be deducted.

    2015 Long Term Care Insurance Federal Tax Deductible Limit Amounts

    Age

    Maximum Deduction Amount

    Age 40 or less

    $380

    More than age 40 but not more than age 50

    $710

    More than age 50 but not more than age 60

    $1,430

    More than age 60 but not more than age 70

    $3,800

    More than age 70

    $4,750

    For more information, see IRS Publication 502.

    State of Minnesota: Minnesota residents can claim a state tax credit of up to $100/year on Schedule M1LTI. For more information, email the Minnesota Department of Revenue at indinctax@state.mn.us or call 1-800-652-9094

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