Many states offer additional protection to people who choose to buy private Long Term Care Insurance, in the form of Medicaid asset protection. Illinois has the framework in place for such a program to exist, but the final decisions on what policies will qualify are not finished.
Here's what you need to know as a shopper: you should consider purchasing coverage now, before the rules are set, with the hope that your plan would be retroactively made part of any Partnership plan. On the other hand, you have protection and a rate that is set at a younger age in the mean time. There's no gurantee the state of Illinois will ever make any final decisions, so you should act sooner rather than waiting for something that may never materialize in the state.
Illinois Partnership Status: Not Active
While there is a state statute covering a Long Term Care Partnership in Illinois, there are currently no policies for sale (as of 07/2014) that are Partnership-approved in Illinois. While this may change in the future, it means that there is no added state protection beyond the benefits your LTC policy pays. Before you just stop reading here altogether, consider that the Partnership plan may actually not be important.
How Partnership Works
For a preview of how the Illinois LTC Partnership Plan may work, consider how it works in other states based off of the same Federal Deficit Reudction Act platform. In other states (about 45 other states have Partnership programs) if you purchase a Long Term Care Insurance policy with inflation protection, you'll qualify for protection from the state's Medicaid spend down requirements should you exhaust the benefits of your insurance coverage. This allows even smaller LTC policies to still be suitable for asset protection, because in essence it assures you won't spend your last assets covering a LTC situation.
Most states provide dollar-for-dollar asset disregard equal to the amount paid in benefits on your behalf from your policy. So a typical LTC claim may cost the insurer $200,000, and if the claimant still needed additional care they could qualify asset-wise for Medicaid without the need to spend down nearly all of their assets to the mandated $2,000 limit. Since the policy paid out $200k, an additional $200k would be allowed by the state.
Plan Ahead in Illinois
Given that there is currently legislation in progress, it's possible that an Illinois LTC Partnership program will be instituted in the near future. Should this occur, the state may choose to grandfather recently purchase policies in to the program if these policies meet the state's requirements. We can make some fairly safe assumptions that, for most buyers of LTC insurance, at least some form of compound inflation protection will be required. By purchasing a 3%, 4%, or 5% compound inflation rider, you probably have a better chance of your plan being Partnership status if a grandfather clause is added to legislation.
Get a Plan Unique To You
In Long Term Care planning, it's important to consider your current and future financial statuses. A skilled LTC specialist can help determine your needs, but a good first starting point is our free long-term care comparison quote packet, which you can request from our site.
It may seem tempting to wait and see what the state decides to do, and to see if policies are introduced that are Partnership status approved in Illinois.
Our suggestion is to purchase coverage now, that could be replaced in the future if there is not a grandfather clause in the legislation that's passed. This way, you're covered in the interim, and if a better plan comes around, you could replace it.
"We started with a local agent but quickly realized we may be paying too much for LTC coverage. After a discussion with LTC Tree, we determined that there was a better way. We ended up with a guaranteed premium and could not be happier.David P., Palentine Illinois