GAO: LTC Partnerships May Not Help Medicaid

Both partnership and traditional LTC insurance policyholders earned more and had more assets on average than residents without LTC insurance had, Dicken writes.

In two of the partnership states, more than half of partnership policyholders over 55 had a monthly income of at least $5,000, and more than half of all their households had assets of at least $350,000 when they purchased partnership coverage.

“Because of the amount of insurance partnership policyholders generally purchase and their typical income and assets, few partnership policyholders are likely to ever become eligible for Medicaid, which suggests that the partnership programs are likely to have a small impact on Medicaid spending,” Dicken writes.

Although the partnership programs are not likely to reduce states’ Medicaid expenditures, the programs do offer some benefits for some consumers, Dicken writes.

“Even if individuals do not end up using their partnership insurance or Medicaid, the availability of asset protection may provide peace of mind for those who fear the risk of having to spend their assets on their long-term care,” Dicken writes.

Commenting on the study, officials at the U.S. Department of Health and Human Services argue that the GAO review was inconclusive because the GAO did not account adequately for the effect that purchasing an LTC policy would have on estate-planning efforts, such as asset transfers.

People with partnership policies are less likely than others to hide assets from Medicaid through transfers, HHS officials argue.

Dicken calls the HHS argument unpersuasive.