Colorado Long-Term Care Partnership Law

Long-term Care Partnership Programs bring states and insurance companies together in a common goal: giving residents incentives to purchase long-term care policies. Medicaid bears a large portion of nursing home costs, and patients who have long-term care insurance are less likely to need Medicare, saving state and federal funds. Colorado instituted its Partnership Program as of Jan.1, 2008, along with several regulations for insurers.

Long-term Care In Colorado

• The Long-term Care Partnership Program was started as a part of the Deficit Reduction Act of 2005. It was designed to relieve the burden on Medicaid and protect Colorado consumers from the high costs of long-term care. According to Completelongtermcare.com, as of 2010, semi-private rooms in a nursing facility cost an average of $72,2234 annually. Custodial care, the kind of care received at nursing homes, isn't covered by Medicare or traditional health insurance. Purchasing a long-term care policy allows you to preserve some of your estate, rather than having to spend everything you have on long-term care.

Consumer Benefits

• The most compelling reason for you to purchase a Partnership policy is the guarantee that if you exhaust your policy, you can go onto Medicaid for nursing home coverage without having to spend down all your assets as you normally would. Colorado protects your assets by allowing you to keep an amount equal to the policy benefit. For example, if your long-term care policy has a $300,000 benefit and you exhaust your policy, instead of spending down your assets as you normally would to qualify for Medicaid, you can keep up to $300,000 to pass on to your heirs.

Policy Requirements

• Colorado law has several requirements for policies being sold to Colorado residents. First and foremost, policies must clearly state that they are a Partnership policy. A "Notice Regarding Your Long-Term Care Partnership Status" must also be included. There are also minimum benefit requirements. The policy must be tax-qualified, which means all or a portion of premiums can be deducted on your income tax. Inflation protection is required if you're under 75 years old. Inflation protection is a policy provision that adds additional benefits to your plan to allow it to keep up with inflation. If you're under 61, your policy must have 5 percent compound inflation protection. This means that each year, an additional 5 percent of your current benefit amount is added to your policy benefit. If you're 62 to 74 years old, your policy must have either 3 percent compound inflation, 5 percent simple inflation or 5 percent compound inflation protection until the benefit amount doubles.

Policy Drawbacks

• Partnership policies aren't guaranteed. It's possible that if federal or state law changes, you may not receive the Medicaid benefits. It's also possible the Partnership policy may not be reciprocated if you move out of Colorado. You also should be cautious about making changes to your policy; dropping the inflation protection, for example, could result in you losing your Partnership benefits. It would still remain a long-term care policy, of course, but it wouldn't have the additional Medicaid asset protection. (reference 2)