Partnership Plans
State-approved LTC insurance policies offering special asset protection from Medicaid spend-down — a powerful safety net at no additional cost.
What Is a Partnership Plan?
The Long Term Care Partnership Program is a collaborative initiative between private LTC insurance companies and state Medicaid programs. It encourages consumers to purchase private long-term care insurance by offering powerful asset protection incentives in return.
The program serves dual goals: it protects citizens' assets from being depleted by long-term care costs, and it reduces the financial burden on state Medicaid programs. When you purchase a Partnership-qualified policy, you gain a layer of asset protection that standard LTC policies simply cannot provide.
Protect Your Assets
Shield savings, home equity, and retirement accounts from Medicaid spend-down
Reduce Medicaid Burden
States benefit by shifting long-term care costs from taxpayers to private insurance
No Extra Cost
Partnership qualification adds zero cost to your policy premium
How Dollar-for-Dollar Asset Protection Works
The concept is straightforward: for each dollar your Partnership policy pays out in long-term care benefits, one dollar of your personal assets is protected from Medicaid's spend-down requirements. This is a game-changer for retirement planning.
With Partnership Protection
Your policy pays $300,000 in LTC benefits.
You keep $300,000 of personal assets protected from Medicaid spend-down.
If you still need care after benefits exhaust, you qualify for Medicaid without losing those protected assets.
Without Partnership Protection
Your LTC policy benefits run out.
To qualify for Medicaid, you must spend down virtually all assets to just $2,000.
Your life savings, retirement accounts, and potentially your home are consumed by care costs.
Two Types of Partnership Protection
Partnership plans come in two models, depending on which state enacted the program.
Dollar-for-Dollar Protection
Most common model — used in all DRA states.
Every dollar your policy pays in benefits equals one dollar of assets protected from Medicaid spend-down. If your policy pays $200,000 in claims, $200,000 of your assets are shielded.
Total Asset Protection
Indiana's original model.
Once you exhaust your Partnership policy benefits and apply for Medicaid, all of your remaining assets are protected regardless of how much the policy paid. This offers the most comprehensive protection available.
Estate Recovery Protection
One of the most valuable — and often overlooked — benefits of Partnership plans is protection from Medicaid's Estate Recovery Program (MERP). Under normal Medicaid rules, the state can seek reimbursement from your estate after death for any Medicaid benefits paid on your behalf.
With a Partnership policy, assets protected under the dollar-for-dollar (or total asset) provision are exempt from estate recovery. This means those assets can be passed on to your heirs and beneficiaries — enabling inheritance transfer that would otherwise be impossible under standard Medicaid rules.
Why This Matters
- Protected assets can be inherited by your children and grandchildren
- Your home equity is shielded from state claims after your passing
- Retirement savings you've built over a lifetime remain in your family
- Eliminates the risk of Medicaid clawback on protected assets
What Does a Partnership Plan Cost?
Here's the best part: there is no additional cost for Partnership qualification. A Partnership-qualified policy costs exactly the same as a traditional LTC insurance policy with the same benefits. You get the added layer of Medicaid asset protection at zero extra premium.
Inflation protection is required.States require Partnership policies to include inflation protection, but this is already a strongly recommended feature for any LTC policy. Inflation protection ensures your benefits keep pace with rising care costs — without it, a policy purchased today would cover only a fraction of future expenses.
Same Price, More Protection
Inflation Protection Requirements
To qualify as a Partnership policy, the Deficit Reduction Act (DRA) states require specific levels of inflation protection based on the applicant's age at the time of purchase. The original four pilot states (California, Connecticut, Indiana, and New York) may have different rules.
| Age at Purchase | Required Inflation Protection | Notes |
|---|---|---|
| Under 61 | Compound inflation protection | Typically 3% or 5% compound growth |
| 61 to 76 | Some form of inflation protection | Compound or simple inflation accepted |
| Over 76 | No inflation protection required | Policy still qualifies without inflation rider |
These requirements apply to DRA states. The original four pilot states (CA, CT, IN, NY) may have different inflation protection rules.
History of the Partnership Program
The Partnership Program began in 1992 as a pilot in just four states: California, Connecticut, Indiana, and New York. For over a decade, only residents of those states could access Partnership protection. That changed with the 2005 Deficit Reduction Act (DRA), which opened the program to all states.
Pilot program launches in CA, CT, IN, and NY
Deficit Reduction Act opens Partnership to all states
States begin adopting their own Partnership programs
Active in approximately 43–45 states
State Availability & Reciprocity
Partnership plans are now active in approximately 43 to 45 states. Most states honor Partnership policies purchased in other states through reciprocity agreements, but there are important exceptions to be aware of.
Reciprocity
If you purchase a Partnership policy in one state and later move to another, most states will honor the asset protection from your original policy. This makes Partnership plans a reliable choice even if you plan to relocate in retirement.
Notable State Updates
- New York stopped offering new Partnership-qualified policies as of January 1, 2021
- California does not participate in reciprocity with other states
- 40+ states currently offer and honor Partnership plans with full reciprocity
What Does NOT Qualify as a Partnership Policy?
Not all LTC-related insurance products can be Partnership-qualified. Only standalone, individual traditional LTC insurance policies sold through a state's approved Partnership program qualify for asset protection.
Hybrid Life/LTC Policies
Life insurance policies with LTC riders do not qualify for Partnership asset protection, even if they provide LTC benefits.
Hybrid Annuity/LTC Products
Annuity-based products with long-term care benefits are not eligible for Partnership qualification.
Group LTC Policies
Employer-sponsored or association group LTC plans do not qualify for Partnership protection.
Partnership by the Numbers
Real data from the original four pilot states demonstrates just how effective Partnership plans are as a safety net.
Partnership policies issued in the original 4 pilot states
policyholders who actually needed Partnership Medicaid benefits
of Partnership policyholders who exhausted their benefits
of all LTC claims last 3 years or less
What This Tells Us
Of the 172,477 Partnership policies sold in the original four states, only 1,209 policyholders — approximately 0.7% — ever needed to use the Partnership Medicaid benefit. Since 92% of all LTC claims last three years or less, most people will never exhaust their policy benefits. But for those who do, Partnership protection is an invaluable safety net that preserves their life savings.
The Strategic Value of Partnership
Partnership plans offer a smart planning strategy: you can buy coverage closer to the average risk level — knowing that if your claim lasts longer than average, the Partnership asset protection kicks in as a safety net. This approach can make comprehensive LTC planning more affordable.
Buy Based on Average Risk
Since 92% of claims last 3 years or less, a 3-year benefit period covers the vast majority of claims at a lower premium.
Safety Net for Longer Claims
If your care need extends beyond your benefit period, Partnership protection shields your assets from Medicaid spend-down.
No Extra Premium Required
You get this additional layer of protection at no cost above a standard LTC policy with the same benefits.
Peace of Mind for Your Family
Estate recovery protection means your assets can be passed on to heirs even if Medicaid ultimately pays for your care.
The bottom line:Partnership plans let you purchase a practical amount of coverage — enough to handle the statistically likely claim duration — while still having a built-in safety net if the unexpected happens. It's one of the most powerful and underutilized tools in long-term care planning, and it costs you nothing extra.
Get a Partnership-Qualified LTC Quote
As independent brokers, we'll help you find a Partnership-qualified policy in your state — comparing rates from top carriers to get you the best coverage at the best price, with built-in Medicaid asset protection at no extra cost.