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Public-private partnership helps seniors shield retirement assets


A year ago, the state of Iowa launched an initiative aimed at enabling residents to plan for their long-term care in a way that doesn’t require them to deplete all of their assets to become eligible for Medicaid.

The Iowa Partnership for Long-Term Care, an alliance between the state and the insurance industry, allows insurers to issue policies that enable covered individuals to keep a portion of their assets equal to the amount of long-term care coverage they purchase.

“What the partnership program does is say, ‘We’ll match the maximum amount of benefit you have with the policy, and that’s your spend-down limit,’” said Dana Cox, a representative of LTC Financial Partners LLC. “So if you have a long-term care policy with a maximum lifetime benefit of $500,000, you protect that amount of your assets. And then if you do enter care and exhaust the limits of your policy, you can stop at that limit and then Medicaid will pick it up. If you think about it, you’re actually protecting $1 million of your assets.”

The Iowa Insurance Division does not track how many policies have been sold in the state that provide the additional protection.

The program requires insurers to provide annual compounded inflation protection of at least 3 percent on policies purchased by Iowans up to age 61. From age 61 to 75, a simple 3 percent inflation protection factor is required. From age 76 on, no inflation protection is required, but may be purchased as part of the policy.

Iowa is among 40 states that have entered into such a partnership agreement. All but one of those states, California, offer reciprocity agreements through which individuals may transfer partnership coverage to another state that offers it.

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