Slide 1 - The Ohio Department of Aging

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Slide 1 - The Ohio Department of Aging Powered By Docstoc
Presented by Chris Reeg and Katherine Melton Webinar October 3, 2008


What is Long Term Care & Who Pays
Long Term Care is a variety of services that help people with health or personal needs and activities of daily living over a period of time. Long-term care can be provided at home, in the community, or in various types of facilities, including nursing homes and assisted living facilities. Most long-term care is custodial care. Medicare doesn’t pay for this type of care if this is the only kind of care you need. How do you pay for Long Term Care Private Pay Medicaid Long-Term Care Insurance


Basics of Long Term Care Insurance
LTC insurance pays for care given in a nursing home (or other locations) to treat chronic health conditions. •Every policy is different •Policies can be expensive •Not guaranteed issued •Policies are based on age: The older you are when you buy a policy…the more you pay.


Basics of Long Term Care Insurance
Should you purchase a LTC insurance Policy?

•Health Do you have habits or health issues that could result in the need for LTC? Does your family history put you at higher risk for needing LTC?
•Wealth Can you afford the premiums? Can you afford extended nursing care? Do you wish to leave assets to your family?


Basics of Long Term Care Insurance
Core Benefits • Deductible or Elimination Period- time when the policy holder is liable for LTC costs before the insurance payments begin. For example, a 100 day elimination means you will pay for the first 100 days out of your own pocket. This could cost you more than $15,000.


Basics of Long Term Care Insurance
Core Benefits • Daily Benefit- most policies define benefits in terms of a maximum daily benefit, or amount of money that the policy will pay toward each day in the nursing facility. For example, a $100 daily benefit could pay the actual bill up to $100 or pay a flat per diem of $100. If the actual nursing bill is greater than $100, you are responsible for the difference. Inflation Protection must be offered which will increase the daily benefit typically by 5% each year

Basics of Long Term Care Insurance
Core Benefits • Benefit Period- is the length of time that the policy will pay the daily benefit. The benefit period may be as short as one year or as long as a lifetime.

For example, a two year benefit period means that the plan will pay the daily benefit for two years. If your stay in a nursing home goes beyond two years, you are responsible for the payment.


Basics of Long Term Care Insurance
Bells and Whistles •Guaranteed Purchase Option •Waiver of Premium •Death or Survivor Benefit •Hospice Care •Restoration of Benefits •Ambulance •Prescription Drugs •Bed Reservation •Respite Care •Medical Equipment


Basics of Long Term Care Insurance
Locations of Care •Nursing Homes •Adult Day Care •Home Health Care •Assisted Living or Residential Care
*Each location of care will have a different payment schedule. For example, if your nursing home daily benefit is $100, the home health daily benefit may only be $50.


Basics of Long Term Care Insurance
When can I use my policy? Benefits Triggers- determine when your physical or mental condition has reached a point that you are entitled to benefits. Physical Impairment- cannot perform usually three Activities of Daily Living (ADLs); bathing, dressing toileting, continence, transferring, eating. Cognitive (mental) Impairment- diagnosed as having condition such as Alzheimer’s Disease or senile dementia, deterioration or loss of mental ability requires verbal cueing and your condition as been verified by tests that are approved by the insurance company.

Basics of Long Term Care Insurance
Tax Qualified Plans
Federally tax qualified policies – most policies are this type Benefits are triggered by a licensed health care practitioner certifying within the preceding twelve months that you are chronically ill • which means you are expected to be unable to perform at least two out of five or six ADLs without substantial assistance for at least 90 days due to a loss of functional capacity

• you need substantial supervision to protect your health and safety due to severe cognitive impairment (such as Alzheimer’s disease).

A licensed health care practitioner must certify one of the above conditions within the preceding twelve month period.

Basics of Long Term Care Insurance
Consumer Protections • Company history of rate increases must be disclosed to the consumer.

• Policy must offer (but not require) at time of purchase an inflation protection option. If the offer is not declined in writing, the inflation protection feature is included in the purchased policy.
• Policy must offer (but not require) a non-forfeiture option. If this option is chosen, it must be at least one of these: reduced paid up insurance, extended term insurance, or a shortened benefit period. All policies now include a Contingent Benefit Upon Lapse. • Consumer must be given a Shoppers Guide to LTC Insurance written by the National Association of Insurance Commissioners (NAIC). • Consumer must be given an outline of coverage, or summary of the policy explaining what it will and will not do.


Basics of Long Term Care Insurance
•Pre Existing Conditions- anything that you have been diagnosed with or treated within the 6 months prior to purchasing the policy may not be covered for the first six months of ownership •Mental Diseases or Disorders- policies do not have to pay for care resulting from mental or nervous disorders such as insanity, nervous breakdown, etc. Policies must pay for care resulting from Alzheimer’s or senility. •Alcoholism or Drug Addiction- policies will not cover care resulting from either alcoholism or drug addiction. Some policies will cover care if the result of a prescription medication. •Other Insurance- policies will not pay any expenses that are covered by another insurance or Medicare.


Overview of Long Term Care Insurance Partnership
•Public-private partnership • States and insurance companies • Encourages purchase of long term care insurance by more of the population • A key goal is to reduce Medicaid expenditures by delaying or eliminating the need for some people to rely on Medicaid to pay for their long term care services • Medicaid has very complex eligibility rules that look at an applicant’s income and assets, which sometimes require applicants to first reduce their assets in order to be eligible. • Federal and related state laws have created a program that allows Medicaid to disregard certain assets in the eligibility determination process and again at time of estate recovery based on the use of these “partnership” policies.

HOW PARTNERSHIP WORKS • The amount of benefits actually paid for qualified long term care services under a “partnership-qualified” private insurance policy at the time the person applies for Medicaid is the same amount that is disregarded in the asset eligibility determination. This is called the dollar for dollar model. • An applicant for Medicaid does not have to exhaust their benefits under a private long term care partnership policy to apply for Medicaid; however, the longer they can wait the more assets they can protect since the amount protected is determined at the time of application for Medicaid. • Since a person must reapply each year for Medicaid long-term care services under OAC section 5101: 1-39, if more is paid to or on behalf of an individual under a qualified long-term care partnership policy after the initial application for eligibility and before they pass away, that amount spent under the private policy at the time of the last reapplication will also be disregarded in both the annual eligibility determination and the estate recovery process.

PARTNERSHIP BENEFITS Partnership qualified policies have stricter requirements to receive benefits than other long term care policies. But, having and using these policies also:


provides tax benefits

2) can assist beneficiaries to avoid having to become impoverished before being eligible for Medicaid, should they ever need to apply for that program 3) can protect some of the beneficiary’s assets from estate recovery by the Medicaid program, and retain those assets for their heirs.



1)Purchase and use of a private partnership policy does not guarantee the insured will be eligible for Medicaid 2) Medicaid eligibility determination also looks at income in addition to assets, and they may not necessarily be eligible on that account 3) The benefit package for Medicaid may not be identical to the private partnership qualified insurance policy they were utilizing before going on Medicaid.


Features of a Partnership Qualified Long Term Care Policy 1) The policy must be issued after the effective date of the State Plan Amendment filed with HHS-CMS to participate in the partnership program. In Ohio, this date is September 10, 2007, since the related enabling insurance law and regulation were effective on that date. 2) The policy must be federally tax-qualified. 3) The insured must be a resident of the state sponsoring the partnership program when their coverage first became effective. 4) The policy must include certain additional NAIC consumer protection provisions – from the NAIC model long term care act and regulation. These are listed in the Deficit Reduction Act of 2005.


5 )The biggest change from other long term care policies: partnership coverage must contain specific inflation protection at certain ages at time of purchase: a) If the person at time of purchase has not yet attained the age of 61, the policy must contain annual inflation protection of at least 3 % compounded annually per year, or a rate, compounded annually, that is equal to the annual consumer price index. b) If the person at time of purchase is at least 61 but less than 76, the policy must contain annual inflation protection of at least 3 % simple, or a rate equal to the annual consumer price index. c) If the person at time of purchase is at least 76, the policy may but does not have to provide some level of inflation protection. Remember that these are federally tax qualified policies as well, and an offer of inflation protection must be made and rejected in writing to avoid this protective feature being included in the policy for those 76 and older. (See OAC section 3901-4-01(M))

Ohio Partnership has Certain Procedural Requirements Insurance Exchanges of old long term care policies - Under Ohio’s new
partnership rule, Ohio Administrative Code section 3901-4-02, effective September 10, 2007: 1) Insurers choosing to participate in the partnership program must make a written offer on a one-time basis, to all their existing policyholders and certificate-holders that were issued long term care coverage on or after August 12, 2002. 2) These persons have the option to exchange their existing coverage for coverage that is intended to qualify as part of Ohio’s long term care insurance partnership program. 3) Appendix “A” to the new partnership rule, OAC section 3901-4-02, is the notification form to be used in making the offer of exchange, or something substantially similar in content.


4) The offer to exchange must be made within 1 8 0 days of the date the insurer begins to advertise, market, offer, sell, or issue policies that qualify under the Ohio partnership program. 5) The insurer can make the exchange by issuing a new policy or amending an existing policy with an endorsement or rider.


Ohio requirements for exchanges (OAC section 3901-4-02)

1) An offer of exchange must be made on a nondiscriminatory basis: without regard to the age or health of the insured.
2) An offer must remain open for at least 90 days from the date of mailing by the insurer.

3) The insurer must provide the insured a copy of the Appendix “A” notification form or a form that is substantially similar in content.
4) An offer to exchange may be deferred for any insured who is currently eligible for benefits under an existing policy or who is subject to an elimination period on a claim, but when that eligibility or elimination period is up the offer must be made. 5) However, an offer does not have to be made to an insured who would have to purchase additional benefits to qualify under the partnership program, and who is not eligible for new benefits under the insurer’s new business, long term care, underwriting guidelines.

6) The offer of exchange is not a guarantee of issue. The partnership rule has requirements for underwriting and rating which vary by whether the new policy has an actuarial value of benefits equal to or less than the actuarial value of benefits of the existing policy or whether they exceed that of the existing policy. See OAC Section 3901-4-02(E)(4) and (E)(5). 7) The new policy offered in an exchange must be on a form that is currently offered for sale by the insurer in the general market. 8) The effective date of the partnership plan policy shall be the same as the new policy – remember the requirement that the policy be issued after the effective date of the State Plan Amendment. 9 ) In the event of an exchange, the insured shall not lose any rights, benefits or built-up value that has accrued under the original policy with respect to the benefits provided under the original policy, including, but not limited to, rights established because of the lapse of time related to pre-existing condition exclusions, elimination periods, or incontestability clauses.


10) Existing regulatory requirements for marketing long term care apply to exchanges including, but not limited to, the requirements relating to replacements and suitability. “Replacement” requires certain notifications and “suitability” requires the insurer and agent make a reasonable effort to find out if the policy is appropriate for the person, including whether they can afford the premium over time. Excessive insurance is not to be sold and agents must give prospective applicants a copy of the long term care Shopper’s Guide and written notice of the address and phone number of the Ohio Senior Health Insurance Information Program. 11) For those insureds with long-term care policies issued before August 12, 2002, any insurer may offer any insured an option to exchange an existing policy for a policy that qualifies as a state long-term care partnership plan. (It is not mandatory)


Ohio Filing Requirements for Partnership Qualified Policies

1) Any policy intended to qualify as a partnership plan must be filed with the Superintendent of Insurance for approval as a partnership qualified policy prior to use.
2) This filing must include the partnership program certification form attached as Appendix “B” to the rule OAC section 3901-4-02, signed by an officer of the company. 3) This form certifies the policy includes the NAIC consumer protections and the inflation protection feature required by the Deficit Reduction Act of 2005. 4) This includes seeking certification of previously approved non-partnership policies that qualify as partnership policies, and riders to be used with previously approved policies to bring them into partnership qualified status. About 18 companies have certified partnership forms currently.

Partnership program requires specific disclosure to applicants

1) Insurers or their agents are required to provide to applicants a long term care partnership policy disclosure form. This is Appendix “C” to the rule, OAC section 3901-4-02 or a form substantially similar.
1) The disclosure form is given at time of solicitation with the outline of coverage for a policy intended to qualify under the Ohio long term care insurance partnership, or for a group policy with the enrollment forms, and for a life policy or rider with the policy summary. 2) Appendix “C “ or a form substantially similar in content must also be given no later than the time of policy delivery. This is the insurer’s responsibility. Among other things, this notice reminds the policyholder that changes to the policy as purchased can change its “partnership qualified” status.


Ohio Department of Insurance 50 West Town Street, Third Floor Columbus, Ohio 43215

Consumer Hotline: (800) 686-1526
Fraud Hotline: (800) 686-1527 OSHIIP Hotline: (800) 686-1578


Questions ?



Ohio’s Partnership for Long-Term Care Insurance

Start planning today by getting your partnership policy for tomorrow!

• Risk of needing long-term care and estimated costs • The Ohio Partnership for Long-Term Care Insurance – What is it? How can it help? • Selecting a Partnership policy: the benefit of Medicaid Asset Protection • How Partnership policies work • How to get one

Risk of Needing Long-Term Care (LTC)
• Most of us find out the hard way – when we or someone we love needs it • About 60 percent of people age 65 and over will need some form of LTC • Nearly 40 percent of people getting LTC are between ages 18-64 • Medicare does not cover most LTC costs • Medicaid only pays LTC for those with limited income and assets. Most qualify after LTC has wiped out almost all of their financial resources

Source: Own Your Future Long-Term Care Planning Kit

LTC isn’t just care in a nursing home…
People are living longer and want to stay at home as long as possible. LTC can be provided in all of the following:

• At home • Adult day care • Assisted living

• Nursing home • Hospice facility • Other settings

Cost of LTC in Ohio
• Average annual cost:
– $67,058 for a private room in a nursing home

– $60,251 for a semi-private room in a nursing home
– $29,738 for care in an assisted living facility (private, one bedroom) – $51,714 for a licensed, Medicare-certified home health aide (50 hours per week)

– $44,122 for homemaker services (50 hours per week)

• Assumed average stay in a nursing home is 2.5 years. • Average length of time for care in the home is 4.3 years
Source: 2007 Cost of Care Survey, Genworth Financial, March 2007

Who pays for LTC?
• • • • An individual’s family Long-term care insurance Medicaid Local Sources

Financial planners generally recommend LTC insurance if someone:
• owns total financial assets of at least $75,000 that they want to protect (not including home or car); • has annual retirement income of at least $25,000 to $35,000 for an individual or $35,000 to $50,000 for a couple; • is able to pay premiums without financial difficulty; • if one of their major financial goals is to leave an inheritance to children, grandchildren, or other heirs.

Selecting an Ohio Partnership Policy
The unique benefit of asset protection.

What is the Ohio Partnership for Long-Term Care Insurance?
• Collaboration between the State and private insurance companies • Insurance companies agree to sell long-term care insurance policies, also known as “partnership policies” with enhanced consumer protections • Creates a “win-win” for the State and Ohio citizens – Encourages Ohioans to plan for their long-term care needs and retain more of their assets – State saves money by reducing reliance on the state Medicaid program which finances most of Ohio’s long-term care costs

Where did it all begin?
• Pilot began in 1992 in four states (CA, CT, IN, NY) as Robert Wood Johnson Foundation Grants. • Partnerships pilots resulted in increases in the sale of long-term care insurance to moderate income consumers most likely to deplete resources and rely on Medicaid for long-term care • Ohio Revised Code (ORC) 5111.18 required ODJFS to establish a long-term care partnership program (LTCPP) by September 1, 2007.

Ohio’s Project Team
• • • • • • • • • Ohio Department of Job and Family Services Ohio Department of Insurance Ohio Department of Aging Ohio AARP Genworth Financial Association of Philanthropic Homes, Housing and Services for the Aging Ohio Association of Health Underwriters Ohio Health Care Association Ohio Department of Job and Family Services Directors’ Association

Features of Ohio’s Partnership policies
• Enhanced inflation protection
– For ages 60 or younger:
• includes a compound inflation benefit (3% compound or consumer price index)

– For ages 61 – 75:
• includes some form of an inflation benefit (3% simple or consumer price index)

– For ages 76 and older:
• no purchase of an inflation benefit is necessary

Medicaid Asset Protection
• Allows buyers of partnership policies who need help paying LTC costs to potentially qualify for Medicaid without depleting all of their assets • Standard Medicaid Asset Limit:
– $1500 for individuals; $2250 for couples

• Total Medicaid Assets Limit for a holder of a partnership policy is based upon the amount of benefits paid by the partnership policy.

Why would someone need Medicaid if they buy LTC insurance?
• Someone may have expenses that exceed their LTC coverage; Medicaid can help pay the difference if they meet certain eligibility criteria
– (e.g., income, age, Ohio residency, citizenship)

• If someone buys a partnership policy and the policy pays for any portion of their LTC needs, they may still be able to qualify for Medicaid even if their assets exceed the limit

What assets does Medicaid count?
Countable Exempt

• • • • • • •

Cash Savings Checking Stocks Bonds Mutual funds Real property

• Home (If applicant or spouse is living there) • Car (Or a portion of the value) • Personal or household items • Irrevocable pre-need funeral contracts

How does the partnership work?
Step 1: Individual obtains a partnership policy.

Step 2: Policy pays benefits for the individual’s LTC needs

Step 3: If there are costs that exceed what the policy covers, or the policy is exhausted, individual can apply for Medicaid to help pay for LTC.

How the partnership work? (continued)
Step 4: Upon application for Medicaid, individual provides the caseworker a copy of their partnership policy and the amount of benefits paid to date by the policy.

Step 5: Caseworker determines countable assets based on the Medicaid asset limit combined with the total benefits paid by the policy

Here’s an example…
Joe Smith has received care at home for almost two years and now must move into a nursing home. To date, Joe’s partnership policy has paid $100,000 for his care. His authorized representative applies for Medicaid on his behalf to help pay future costs.

• Without a partnership policy • Total Assets: $100,000 • Total paid out-of-pocket for LTC: $98,500; apply for Medicaid • Standard Medicaid Asset Limit: $1,500 (individual) • Total Exempted Assets once eligible for Medicaid: $1,500

• With a partnership policy • Total Assets: $100,000 • Total out-of-pocket costs: cost of premiums • Partnership policy paid benefits: $100,000 • Medicaid Asset Limit for Joe increases to $101,500 • Total Exempted Assets once eligible for Medicaid: $101,500

Here’s an example…
Jane D. has received care in a nursing home for over a year. To date, her $150,000 partnership policy has only paid $100,000 for her care. Through her authorized representative, Jane applies for Medicaid. She can be eligible for Medicaid, but her QLTCP insurer must pay for medical care to the maximum extent of their liability before Medicaid funds may be used to pay for covered services.

• Without a partnership policy • Total Assets: $90,000 • Total paid out-of-pocket for LTC: $88,500; apply for Medicaid • Standard Medicaid Asset Limit: $1,500 (individual)

• Total Exempted Assets once eligible for Medicaid: $1,500

• With a partnership policy • Total Assets: $90,000 • Total out-of-pocket costs: cost of premiums • Partnership policy paid benefits: $100,000 • Medicaid Asset Limit for Jane increases to $91,500 • Total Exempted Assets once eligible for Medicaid: $91,500

More about Medicaid Asset Protection
• Mutual exchange with other states allowing buyers to claim Medicaid Asset Protection even if the policy was purchased outside of Ohio. For other participating states, visit:

• Ability to access Medicaid even when the partnership policy is not completely exhausted

• Amount of resources disregarded at Medicaid eligibility determination will also be disregarded during estate recovery
• More information about Medicaid eligibility can be found at

How Much Do Partnership Policies Cost?
• That depends… • Costs and premiums vary by insurance company • Important to shop around • The younger a person is are when they purchase an LTC policy, the lower their annual premium will be

How does someone know if a Partnership Policy is right for them?
• • • • Can they afford to pay for LTC out-of-pocket? Do they have assets they want to protect? What health care settings does the policy cover? Do they want to protect their family’s standard of living? • Can they afford the policy premiums?

How can someone purchase a Partnership Policy?
• Find an insurance company who is licensed to sell partnership policies

• Visit for a list of insurance companies offering this product
• Visit the National Clearinghouse for Long-Term Care: • Talk to current health insurance agent • Phone directory: check “long-term or health insurance” • Local area agency on aging can also help

Special thanks to CHCS
• Ohio received a $50,000 technical assistance grant from the Centers for Health Care Strategies. • CHCS grant opportunity expands long-term care partnerships beyond the four original states
– Technical assistance from George Mason University Center for Health Policy Research and Ethics and the U.S. Department of Health and Human Services – Grant project period is July 1, 2007 through June 30, 2009

• Ohio using grant dollars to cover expenses related to consumer outreach and education
The Center for Health Care Strategies, in Hamilton, NJ, provided funding for Ohio’s partnership project. This grant was made possible through a separate grant to CHCS by the Robert Wood Johnson Foundation.

• Long-term care planning is more important now more than ever • State has approved the sale of a new type of long-term care insurance; includes Medicaid Asset Protection • Visit for more details

Helpful Information
Ohio Partnership for Long-Term Care Insurance Own Your Future Planning Kit

Ohio Senior Health Insurance Information Program (OSHIIP)1-800-686-1578
Ohio Department of Insurance Consumer Hotline 1-800-686-1526