Colorado citizens who do not have long-term care insurance can have the state pay for their long-term care through the state's Medicaid program, but only if they meet certain resource and income limits in addition to a disability determination. This means they must first use all of their own income and resources to pay for their care before the state will begin paying. Once on Medicaid, a person is only able to keep some of their income for personal needs and for supporting certain family members, but must use their remaining income to pay for their care.
Colorado will now allow insurers to provide qualified LTC Partnership policies beginning January 1, 2008. For every dollar that a LTC Partnership insurance policy pays out in benefits, a dollar of personal assets can be protected (disregarded during the eligibility review and at estate recovery) if you choose to apply for Medicaid.
For example, LTC Partnership policy holders who apply for Medicaid coverage are able to maintain some level of assets (equal to the LTC insurance benefit paid) above the $2,000 Medicaid asset limit currently in place for eligibility purposes and a corresponding disregard during the estate recovery process at the individual's death.
The Federal Deficit Reduction Act of 2005 renewed states ability to establish LTC Partnerships and outlined specific requirements for Partnership policies:
All Partnership policies must include inflation protection. This helps the policy keep up with the rising cost of LTC services. Colorado has adopted inflation protection of 5% compounded annually or, in the alternative, consumer price indexed inflation protection compounded annually up to age 61. From age 61 to 75, Colorado requires inflation protection of 5% simple interest, 3% compound interest, CPI or 5% compounded 2 times max. From age 76 on, no inflation is required but still may be purchased as part of the policy. This provides favorable inflation protection to Colorado residents.
All Partnership policies must be issued after the program begins as of January 1, 2008.
Per federal law, Colorado cannot grandfather policies. Current long-term care insurance policy holders who want to get a Partnership Policy should contact their agent, carrier, or the carrier of their choice.
The Colorado Long-Term Care Partnership is a public/private arrangement between long-term care insurers, Colorado's Medicaid program, the Division of Insurance, the Department of Human Services and the citizens of Colorado. It enables Colorado residents who purchase Long-Term Care Partnership insurance to have more of their assets protected if they later need the state Medicaid program to help pay for their long-term care. Colorado is using this approach to give its citizens greater control over how they finance their long-term care and to help shore up the public safety net against upcoming demographic pressures.
