California Seeks Solutions to Keeping Medical Financially Solvent

As aging baby boomers dominate the population, there is a brewing storm that threatens to financially overwhelm government programs that provide retirement benefits. The realization that potential Medical claims for long term care may bankrupt the system, has forced the state to seek ways to mitigate the threat while there is still time. California is one of four states that have taken concrete steps to encourage people to assume some responsibility for the cost of their own long term care through partnership insurance policies.
Medical is the government program that provides benefits to those who can no longer remain independent and are residing in a nursing home. However, people qualified to receive those benefits can only have countable assets of fewer than $2,000 and a monthly income that is less than the cost of the nursing home.
Therefore, people are required to “spend down” all of their own money, including equity in their homes worth more than $500,000, before Medical will assume the financial burden of their stay in a nursing home. Unfortunately, seniors with few assets and little will place the burden of their care on friends and family in order to remain in their homes. When the friend/family option is not available or appropriate, a nursing home funded by Medical will be their only solution.
The California Partnership for Long Term Care offers special policies that allow buyers to protect assets and qualify for Medical if their condition requires nursing home care and the long-term care policy runs out. The asset protection offered by partnership policies is dollar-for-dollar: for every dollar of coverage that a long-term care policy provided, allows a person to keep a dollar in assets that normally would have to be spent down to qualify for Medical. So, for example, if you buy a long-term care insurance policy that paid out $150,000 in benefits, you would be allowed to retain $152,000 in assets and still qualify for Medical. This will allow people to stay in their homes longer and leave money for a surviving spouse, other family members or to anyone they want instead of having it consumed on the cost of their own care.
In California, only Genworth Financial, John Hancock Life Insurance, Met Life, Banker’s Life and Casualty, New York Life and CalPERS Long-Term Care Program have been approved by the state to offer individual partnership policies. Partnership policies are not for everyone. The policy is most appropriate for middle-income people who have too many assets to qualify for Medical, but can't afford a pricey long-term care insurance policy.