Indiana 5 Hour Long-Term Care
Chapter 4
Through Partnership Policies
Initially Partnership policies were only available in four states: California, Connecticut, Indiana and New York. Some states made initial moves to adopt Partnership plans, but due to several reasons they were not able to move forward with them. With these policies came a guarantee that some or all of one's assets will be protected from Medicaid spend-down requirements, even if the benefits run out under the insurance policy. Therefore, it is not usually necessary to purchase lifetime benefits when buying a Partnership policy; simply enough to cover the quantity of assets to be protected. A three to four year policy is usually recommended.
In California, and Connecticut, the amount of insurance protection purchased is the amount of assets that will be protected (dollar for dollar protection). It is not necessary to spend-down that money, although anything over that amount would have to be used for the participants long-term care expenses. New York was more generous. They allowed asset protection if a Partnership policy was purchased with three or more years of coverage. When such a policy was purchased, the insured becomes eligible for Medicaid after the insured period (or after 6 or more years of home care) without spending down any assets at all.
Indiana was originally like California and Connecticut, but now they use a combination formula, combining dollar-for-dollar protection and state-set dollar amounts. If a state-set dollar amount is initially purchased, the policyowner earns total asset protection. If the initial coverage purchased was less than this specified amount, the policyowner earned dollar-for-dollar asset protection.
It should be noted that Partnership policies protect assets, not income. Income must still be spent on nursing home care, apart from any allowance for a spouse or for personal needs. This is true for all policies, not just Partnership policies. No policy protects income once benefits are used up and the insured goes on Medicaid.
Partnership policies can be as good, better or even worse than traditional policies. It depends, of course, on the options chosen. It is common to see news articles rating policies, but these ratings are often unreliable because they do not reflect the options chosen. It is important for the insurance agent to fully explain available options and allow the potential insured to make their own choices. The selling agent may want to encourage inflation options. It is important to purchase a policy that will cover assisted living facilities. Policies that allow a person to qualify for benefits easily are also an advantage.
When Partnership policies were first created they were not initially portable. Currently the states that offer Partnership LTC policies are working to make them portable among those states that offer such plans. The initial lack of portability was considered a drawback since the contracts only guaranteed asset protection in the state where purchased. If the insured moved, the policy's coverage was retained, but not the feature that protected the assets from Medicaid spend-down after benefits had been exhausted. Since only four states initially offered Partnership plans, the lack of portability was considered a possible drawback to these policies. Some professionals recommended non-Partnership plans as a result
With the passage of Deficit Reduction Act of 2005 (DRA) we will see many more states adopt a Partnership long-term care program so this initial lack of portability will be resolved. The DRA opens up the use of Partnership plans in those states that adopt appropriate legislation to offer them. The reason states had not done so previously was due to the federal requirement that mandated asset recovery when Medicaid funds had been used. The DRA amends section 1917(b)(1)(C)(ii) of the Act to permit other states to exempt LTC benefits from estate recovery, as long as the state has a state plan amendment (SPA) that provides for a qualified state long-term care insurance partnership. Any Partnership plan must be a tax qualified long-term care plan. States must maintain consumer protections that are at least as stringent as those they had in effect as of December 31, 2005.
Commissions for selling Partnership policies are the same or similar when compared to selling other long-term care policies. Special Partnership education is required before an agent may market them. Initially few agents seemed interested in marketing Partnership plans, but that seems to be changing. Partnership plan costs are often higher than non-Partnership contracts, but that is due to the mandated aspects of Partnership plans. When non-Partnership plans offer the same benefits, they are likely to be the same or very similar in price. The important aspect of Partnership policies is the asset protection that is available, something not available in non-Partnership contracts.
Indiana requires agents who want to sell Partnership policies to complete the 8-hour traditional LTC insurance CE requirement plus an additional one-time 7-hour course on the Indiana partnership program. Five hours of long-term care education is required per renewal thereafter.
Government recognizes the need for long-term care insurance policies. Although recognizing this need was a necessary first step, it is only the beginning. If policies are not affordable, or the need unrecognized, the end goals cannot be met. It is vital to our state and federal governments that consumers begin to take on the responsibility of funding their own long-term care requirements. Taxpayers cannot continue to fund the rising costs associated with this type of care.
The partnerships were set up with grant money from the Robert Wood Johnson Foundation. This foundation also made grants to Consumer Report magazine for some of their research on health-care issues for seniors. The intent was to help people with assets of between $30,000 and $100,000, who are considered to be the non-poor, but subject to losing everything if a nursing home confinement occurs. In addition, it was felt that Medicaid would save money by transferring the costs of nursing-home care over to insurance companies. The GAO has stated in their 2007 report that they are skeptical that those who buy Partnership plans will mean any significant savings for Medicaid since currently it is the most wealthy that seems to be buying them. The goal, of course, is to persuade the middle class to do so, since it is they who are most likely to become impoverished and end up on Medicaid.
Those who developed the partnership programs recognized that the consumers who buy long-term care Partnership coverage were also going to be sensitive to rate and premium increases. The goal was to give Partnership policies economic value to those insured, both when issued and at the time a claim occurs. Of course, they also wanted to encourage a competitive marketplace since that tends to keep prices down and values high. Low lapse rates were also a priority, since a policy that is purchased but not maintained helps no one. It is necessary to have a long-term commitment to such policies since they are often purchased twenty years prior to the need. Since the Partnership plans were initially an experiment in the four states that offered them, Federal law actually discouraged other states from enacting them. Some members of Congress were hesitant to encourage private insurance companies in the LTC marketplace because they feared it could discourage government sponsored involvement in some type of universal health care program. Unfortunately, that fear delayed privately purchased long-term care coverage that protected assets.
Exactly how does the asset protection work? Let's look at some examples:
|
|
Assets |
LTC Insurance Purchased |
Medicaid Countable Assets |
|
Pete |
$50,000 |
$50,000 |
$0 |
|
John |
$200,000 |
$100,000 |
$100,000 |
|
Marjorie |
$1,000,000 |
$400,000 |
$600,000 |
|
Betty |
$200,000 |
$0 |
$200,000 |
Pete, who has $50,000 in assets, would normally be required to "spend-down" this money before qualifying for Medicaid. By purchasing $50,000 worth of insurance benefits, he will have fully protected his assets.
John has $200,000 in assets, but he only purchased $100,000 in Partnership LTC benefits. Once his policy benefits have been exhausted he can apply for Medicaid but only the amount of policy benefits will be protected from spend-down requirements. He has purchased enough insurance benefits to cover half of his assets.
Marjorie has a million dollars in assets. Rather than attempt that amount of insurance protection, which would be difficult to do, she simply buys sufficient insurance for a lengthy nursing home stay. Marjorie should probably buy a lifetime policy with high daily benefit levels. Her goal is to protect the amount of assets that would likely go to a nursing home confinement. She does not need to try to match her assets since it is unlikely that it would be necessary to do so. She merely needs to allow for full nursing home protection.
Perhaps Betty believes her children will take care of her. Perhaps she has made it known that it is their "duty" so perhaps she feels no compulsion to protect herself through insurance. For whatever reason, Betty has left her entire $200,000 in assets vulnerable to Medicaid spend-down requirements.
It is possible that Betty has a different outlook on long-term care. She may simply feel that she does not mind spending her $200,000 for nursing home care. In fact, she may have set aside this money for that exact purpose. If that is the case, she actually has planned ahead. She simply planned a different way than Pete, John and Marjorie did.
As is so often the case, definitions need to be standardized to avoid misunderstandings or benefit denial. No policy may be advertised, solicited or issued for delivery as a long-term care partnership contract which uses definitions more restrictive or less favorable for the policyholder than that allowed by the state where issued.
Long-term care partnership policies do, of course, have minimum standards, which must be met. Those standards will be based on the state where issued. Since each state may have different state requirements, plans may vary from state to state, but all of them must meet federally mandated standards. Agents would be acting illegally if they told a prospective client that the policy being presented was a Partnership policy when, in fact, it did not meet partnership criteria.
The minimum standards set down by each state are just that: minimums. They do not prevent the inclusion of other provisions or benefits that are consumer favorable, as long as they are not inconsistent with federal requirements or the required standards of the state where issued.
It is the responsibility of every insurance company and every agent to make reasonable efforts to determine whether the issuance of a long-term care Partnership policy might duplicate benefits being received under another disability insurance policy, long-term care policy, or duplicate other sources of coverage such as a Medicare supplemental policy. The insurance company or agent must take reasonable steps to determine that the purchase of the coverage being applied for is suitable for the consumer's needs based on the financial circumstances of the applicant or insured.
Every applicant must be provided with a copy of the long-term care Partnership publication (which was developed jointly by the commissioner and the department of social and health services) no later than the time of application.
Every long-term care Partnership contract must state that it is designed to qualify for Medicaid asset protection on the first page of the contract. A similar statement must be included on every application for a long-term care Partnership contract and on any outline or summary of coverage provided to applicants or insured.
The states have passed continuing education requirements for those agents wishing to market Partnership policies. It is the responsibility of each agent to contact their state and determine what those requirements are since they do vary state by state.
These special educational requirements do not apply to Medicare supplement policies, contracts between a continuing care retirement community and its residents, or to long-term care insurance policies that do not claim to provide asset protection under the Partnership legislation.
Indiana agents must obtain specific education in order to sell these policies: a one-time 7-hour CE classroom course on the Indiana partnership program.
These special educational requirements do not apply to Medicare supplement policies, contracts between a continuing care retirement community and its residents, or to long-term care insurance policies that do not claim to provide asset protection under the Partnership legislation.
Since long-term care eventually involves anyone who ages and develops the frailty involved with aging, the purpose of the Indiana long-term care program is consumer protection. In order to achieve this, Indiana has:
These requirements apply to any policy, certificate or rider authorized for sale by the commissioner as qualifying under the Indiana long-term care program.
Activities of Daily Living (ADLs)
All of us have a daily routine that involves such activities as eating, bathing, dressing, and so forth. As we age, our ability to do for ourselves may diminish. The activities of daily living (and our ability to perform them) are a measure of our health and cognitive ability. ADLs are a measure for the need to have help from others.
Indiana has established a list of five Activities of Daily Living. In the definitions, however, number five is divided into two items, which makes for six actual definitions:
The term, asset disregard, as used in this context, applies to the total equity value of personal property, assets, and resources not exempt under Medicaid regulations, which at a minimum are equal to the sum of qualifying insurance benefit payments made on behalf of the qualified insured in determining eligibility for the Medicaid program.
There are two types of asset disregard:
As used for long-term care, asset protection means the right extended by IC 12-15-39.6 to beneficiaries of qualified long-term care insurance policies or certificates to an asset disregard under the Indiana long-term care program.
As it applies to long-term care, authorized designee means any person designated in writing to the insurance company by the policy or certificate holder of a qualified long-term care contract for purposes of notification.
The average daily private pay rate means the average daily rate charged by nursing facilities for individuals not qualifying for federal or state reimbursement, established annually on a calendar year basis by OMPP for the period immediately preceding the effective date or renewal date of the contract.
Case management includes, but is not limited to, the development of a comprehensive individualized assessment and care plan, as needed, coordination of appropriate services and the monitor of the delivery of those services.
A case management agency is an agency or other entity approved by DDARS as meeting DDARS case management standards contained in the DDARS community and home care services provider manual.
Certificate means any certificate delivered or issued for delivery in Indiana under a group long-term care policy.
Certificate form means the form on which the certificate is delivered or issued for delivery by the issuer.
A certificate holder means an owner of a qualified long-term care insurance certificate or beneficiary of a qualified long-term care certificate.
As it applies to long-term care contracts, cognitive impairment means confusion or disorientation resulting from a deterioration or loss of intellectual capacity that is not related to or the result of mental illness. It results from Alzheimers disease or similar forms of senility or irreversible dementia. This deterioration or loss of intellectual capacity is established through the use of standardized tests that reliably measure impairment in the following areas:
Cognitive impairment must result in an individual requiring 24-hour a day supervision or direct assistance to maintain his or her safety.
A complex or unstable medical condition requires the individual to have 24-hour a day professional nursing observation or professional nursing intervention more than once a day in a setting other than an acute care wing of a hospital.
DDARS is the abbreviation used for the Indiana Division of Disability, Aging, and Rehabilitative Services. You may see this either in caps or in lower case.
As it applies to long-term care, direct assistance means that the individual cannot perform an activity of daily living safely or appropriately without continual help or oversight. Direct assistance may vary from requiring a person to physically stand by or set up the activity to the activity being totally performed by others.
It is very important to check policy terms, because some definitions, such as insured event, may have meanings specific to the policy. As the term is used for long-term care, it relates to determination of eligibility for benefits under a qualified policy, certificate, or rider and for determining whether these benefits result in an asset disregard for a qualified insured, that any one of the following criteria is met:
For qualified policies eligible for favorable tax status, insured event means when the policyholder has become a chronically ill individual as defined in the Health Insurance Portability and Accountability Act (HIPAA) of 1996. It is commonly referred to as Public Law 104-191. When determining the loss of functional capacity, the policyholder must be unable to perform without substantial assistance from another, two or more of six listed ADLs, as set forth in HIPAA, for a period of at least ninety days.
An integrated policy refers to any qualified long-term care insurance policy or certificate that provides coverage for both long-term care facilities (such as a nursing home) and home and community based services (such as home care or adult day health care).
An issuer is the entity that issues a contract for insurance benefits. It may include, though not limited to, an insurance company, a fraternal benefit society, a prepaid health care delivery plan, a health care service plan, a health maintenance organization, or any other entity that delivers a health care plan or contract.
In Indiana, a long-term care facility would be any facility licensed under IC 16-28, including nursing facilities and residential care facilities.
A long-term care facility policy refers to any qualified long-term care insurance policy or certificate that provides coverage primarily for care in a long-term care facility and does not provide coverage for home and community care.
A Medicaid waiver refers to the home and community based services waiver for the aged and disabled approved by the United States Department of Health and Human Services Health Care Financing Administration under the provisions of Section 1915(c) of the Social Security Act that allows Indiana to provide certain community and in-home services that are not covered in the state Medicaid plan, that are instrumental in the avoidance or delay of institutionalization. Indianas Medicaid waiver services include:
The letters OMPP stand for the Indiana office of Medicaid policy and planning.
Plan of care means a written individualized plan of services developed by a case management agency that specifies the type and frequency of all services required by the individual, the service providers, and the cost of services.
HIPAA established rules regarding the tax status of long-term care insurance contracts. The term, policy eligible for favorable tax status, means the contract meets the federal HIPAA standards established in 1996. This would have to be clearly stated in the policy and in the outline of coverage. It may also refer to Chapter 79 of the Internal Revenue Code of 1986.
Policy form merely means the form on which the policy is delivered or issued for delivery by the issuer.
A policyholder is the owner of an individual qualified long-term care insurance policy or a beneficiary of a qualified individual long-term care insurance policy.
A qualified insured may be either (1) the beneficiary of a qualified long-term care policy, certificate, or rider approved by the department of insurance, or (2) enrolled in a prepaid health care delivery plan that provides long-term care services and qualifies under this rule. A qualified insured may also be an individual who is eligible for an asset disregard under a qualified long-term care policy, certificate, or rider.
As it refers to Partnership plans, a qualified long-term care insurance policy or certificate means a contract that meets the requirements set down for such plans, or a policy or certificate purchased under another states Partnership for Long-Term Care Program, as long as that other states program is similar to the one in Indiana and OMPP has a reciprocity agreement with the other states Medicaid program.
A residential care facility may be known by numerous terms, including assisted living facility, or alternate care facility. Under the criteria of Indiana, it would include any facility that:
Service Summary
Service summary means a written summary, prepared by an issuer for a qualified insured, which identifies the following:
A state-set dollar amount is the least amount of maximum benefits a policyholder or certificate holder must initially purchase in a qualified policy or certificate to be eligible for total asset disregard. The state-set dollar amount begins at 140,000 for qualified policies with an effective date of 1998 or earlier. The state-set dollar amount will increase each year on January first by five percent (5%) compounded annually, rounded to the nearest one-dollar increment and applies to new policies effective during each calendar year.
Qualification of LTC Policies, Certificates, & Riders
No long-term care policy, certificate, or rider will qualify for participation in the Indiana long-term care program unless the contract complies with Indianas requirements. The commissioner will only approve a contract for the Indiana program that is an approved qualified integrated policy and has a favorable tax status under HIPAA.
In Indiana, no long-term care insurance policy, certificate, or rider may be advertised, solicited, or issued for delivery as a qualified long-term care insurance contract that does not meet the requirements of the state and has not been approved by the commissioner as meeting those requirements. Each issuer seeking to qualify a long-term care policy, certificate, or rider for participation in the Indiana long-term care program must do the following:
CONSENT AND AUTHORIZATION
TO RELEASE INFORMATION
I hereby agree to the release of all records and information pertaining to this long-term care policy or certificate by the [insert issuer name] to the State of Indiana for the purposes of documenting a claim for Asset Protection under the State Medicaid program, evaluating the Indiana Long Term Care Program, and meeting Medicaid or Department of Insurance audit requirements.
I understand that the information contained in these records will be used for no purpose other than those stated above, and will be kept strictly confidential by the State of Indiana.
This would be dated and signed by the applicant.
I have been offered a policy or certificate qualifying under the Indiana Long-Term Care Program which provides coverage for both nursing home and home and community care services, and I decline the offer to apply for this coverage.
I understand that in the event I later want to purchase qualifying home and community care benefits through a qualifying rider, I may be required to furnish evidence of insurability and the insurer will have the right to refuse my request.
I also understand that the cost of purchasing home and community care benefits at a later date will be more expensive, since the premium for these benefits will be based upon my age at the time of such purchase.
This would be dated and signed by the applicant.
This report shall also include a comparison of the coverage issued with that being replaced, including a comparison of premiums and an explanation of how the replacement was beneficial to the insured. The replacing issuer shall not cancel, non-renew, or rescind a replacement policy or certificate for any reason other than nonpayment of premium, material misrepresentation or fraud.
This policy [certificate] qualifies under the Indiana long-term care insurance program for Medicaid asset protection. This policy [certificate] may provide benefits in excess of the asset protection provided in the Indiana long-term care program.
LONG TERM-CARE FACILITY POLICY [CERTIFICATE].
This rider qualifies under the Indiana long-term care program for Medicaid asset protection when attached to a long-term care policy, which also qualifies for Medicaid asset protection. This rider may provide benefits in excess of the asset protection provided in the Indiana long-term care program.
This policy [certificate] does not qualify for Medicaid asset protection under the Indiana long-term care program. However, this policy [certificate] is an approved long-term care insurance policy [certificate] under state insurance regulations. For information about polices and certificates qualifying under the Indiana long-term care program, call the Senior Health Insurance Information Program of the Department of Insurance at 1-800-452-4800.
Any type of long-term care contract intended for sale in Indiana as a qualified long-term care insurance policy must meet the minimum benefit standards approved by the insurance commissioner. These minimum standards do not preclude the inclusion of other provisions or benefits, as long as they are not inconsistent with the laws and rules already being followed. The minimum standards are in addition to all other requirements. In order to qualify for participation in the Indiana long-term care program, an LTC contract must meet the following:
In order to be part of the Indiana long-term care program, the qualified contracts must meet the following requirements:
Offers to collect and store the name and address of a designed person to be notified if the policy is about to lapse. If the applicant does not want anyone notified of a pending lapse, he or she must sign a form stating they do not wish to participate in this option. Where a person is designated, it is the insurers responsibility to notify the third party prior to canceling the contract for lack of payment. Notification must be no later than 15 days after the beginning of the 30-day grace period. The designated person may be updated periodically, if the insured decides to change the person that will be notified.
Provide at least a 90-day guaranteed reinstatement period for a policyholder whose policy or certificate has lapsed due to nonpayment of premium, who meets the insured event criteria, and who has paid all required tardy premiums. The reinstated policy or certificate must have the same benefits, terms, and premiums that were present prior to the unintended lapse.
An issuer may pool their qualified and nonqualified policies, certificates, and riders to avoid or reduce the amount of any future premium increase that might otherwise affect the risk pool of qualified contracts.
Minimum Benefit Standards and Provisions
for Integrated Policies
Only policies that are integrated may be advertised as such in Indiana. An integrated policy or certificate must meet the minimum benefit standards established for such contracts and it must have been approved as such by the commissioners office. Such contracts may include additional benefits, but not less than mandated. An integrated policy or certificate is one that does the following:
Minimum Benefit Standards and Provisions
for LTC Facility Policies
All qualified policies relating to long-term care facility policies must meet the minimum benefit requirements as approved by Indianas commissioners office. As for other types, it is acceptable to have higher benefits, but not lesser benefits. To participate in the Indiana long-term care program as a long-term care facility policy or certificate, the following criteria must be met:
All riders that are sold or solicited as a qualified rider must meet the standards for such and have been approved as such by the commissioners office. The issuer may attach a qualified rider to a qualified long-term care policy that they sell. A qualified rider, which provides home and community based services, must provide benefits that provide at least home health nursing, home health aide services, attendant care, respite care, and adult day care services. All home and community-based services covered through the qualified rider must include case management services delivered by a case management agency. While the issuer may place a limit on case management benefits, the limit may not be less than 13 times the daily nursing home benefit per year. Case management benefits may not count toward the contracts maximum benefit.
At a minimum, upon the initial effective date of the qualified rider providing home and community-based services, the qualified rider must provide a daily home and community based benefit of at least 50% of the current daily nursing facility benefit of the long-term care facility policy or certificate. No policy or certificate may pay benefits in excess of the actual charges. The daily home and community-based benefit may not exceed the current daily nursing facility benefit of the long-term care facility contract. If issued on an expense-incurred basis, it must provide benefits that are equal to at least 75% of the per diem cost incurred by the insured. Upon the initial effective date, the qualified rider must at least provide a maximum benefit amount that is at least 50% of the then current maximum total benefit amount for the long-term care facility contract and it may not exceed the current maximum benefit amount of the long-term care facility policy or certificate.
Qualified policies and certificates have reporting requirements. The specifications for the reporting are in the Partnership for Long-Term care Insurance Uniform Data Set (UDS) manual. A printed copy must be provided, upon request, by OMPP. Reports must adhere to the most recent UDS specifications, which include reporting frequencies, file structures, file triggers and formats, field definitions and state specific requirements as noted in the Indiana Long-Term Care Program sections.
All reports are due to OMPP no later than 30 days after the close of the reporting periods specified for the respective reports. The reporting requirements may vary over time, but they will adhere to the most current requirements in the manual.
Issuers of qualified policies and certificates must submit agent sales date to OMPP two times per year for purposes of creating and maintaining a directory of agents for consumers. The format, time frame of reporting periods and due date for data will be specified by OMPP.
Insurers must maintain information on qualified plans regarding any benefits paid under a policy or certificate. The information must be updated quarterly. Should the insured die after having received benefits the information on the benefits paid must be retained for five years following his or her death. The same is true for any insured that lapses the policy or certificate after having received benefits: the insurer would keep the information for five years following the lapse. Unless notified otherwise by Indiana, after the five years the service summary provided by the issuer will be deemed to comply with all asset protection reporting, record keeping, and auditing requirements. The issuer may use microfiche, microfilm, optical storage media, or any other cost effective method of record storage as alternatives to storage of paper copies of stipulated information.
When a policy lapses or ceases to be in force, the issuer must notify the insured of his or her right to request their service records. Upon written request, the issuer will provide to the insured or the insureds designee a copy of the issuers service records, which are necessary to establish the asset disregard. These records must be provided to the insured or their authorized designee within sixty days of the request. The issuer may charge a reasonable fee to cover the costs of providing each set of requested service record copies. Furthermore, the insurer must include a statement with the records advising the insured that it would be in his or her best interest to save the records in case they need to establish eligibility for Medicaid.
The records will contain evidence of the insured event (the event that caused benefits to be paid under the policy) and a description of services provided. For home and community based care, a copy of the original plan of care, a copy of the plan of care required by DDARS, and a copy of any changes made in the plan of care will be part of the service record. These services will count towards asset protection after the case management agency adds the documented need for and description of the new services to the plan of care. In cases when the service must begin before the revisions to the plan of care are made, the new services will only count toward asset protection if the revisions to the plan are made within ten business days of the commencement of the new services. Issuers must maintain initial assessments and subsequent ones as part of insured event documentation.
Total asset protection for an individually owned qualified contract is earned when:
Total asset protection for a qualified policy or certificate that has had a reduction of coverage during the term of the contract is earned when the contract includes a maximum benefit equal to or greater than the state-set dollar amount in force on the original effective date, the maximum benefit was reduced at the request of the insured during the policy term and, at the time of the reduction, the new maximum benefit was equal to or greater than the state-set dollar amount in force during the calendar year in which the reduction took place disregarding any qualifying insurance benefits the insured may have already received, and finally, all of the qualified contract benefits have been exhausted.
Total asset protection for a qualified contract, including riders, that allows spouses to share the benefits is earned when the policy or certificate includes a maximum benefit equal to or greater than the state-set dollar amount in force on the original effective date of the contract and either (1) only one spouse uses the contract and exhausts all the qualifying benefits, or (2) both spouses use the contract benefits and the remaining maximum benefit at the time the first spouse has permanently stopped using them is equal to or greater than the state-set dollar amount in force during that calendar year disregarding any qualifying benefits the second spouse may have already received, and the second spouse exhausts the remaining insurance benefits.
A qualified long-term care insurance contract owned by an Indiana resident that was purchased as part of another states Partnership for Long-Term Care Program will earn dollar-for-dollar asset protection for the qualified insured if the other states program is similar to Indianas and OMPP has a reciprocity agreement with the other states Medicaid program.
Benefits paid in excess of the actual charges do not earn asset protection. Benefits paid that are not based upon the insured event criteria also do not earn asset protection. If the care received is for either home or community-based services it is important to have a case manager since any benefits paid without one do not earn asset protection.
Each issuer must send an asset protection report at least quarterly, with a copy sent to OMPP and to each insured who has received any benefits since the last asset protection report. Each report must include the amount of asset protection for which the insured had qualified for prior to the quarter covered, the total benefits paid by the issuer for services during the reported quarter, a statement of the amount paid in benefits that qualify for asset protection, and a summary total of the amount that qualifies for asset protection. Asset protection reports are subject to audit by OMPP serving as representative of the commissioner.
Each issuer must prepare a service summary at the clients request specifically for the insured if applying for Medicaid. The issuer must also prepare a service summary when the insured has exhausted his or her benefits under the contract or when the policy or certificate ceases to be in force for a reason other than death. The issuer will send a copy to the insured, with a copy going to OMPP, within 30 days of the date of final payment of qualifying insurance benefits by the issuer.
The service summary will include the specific qualified policy or certificate, the total benefits paid for services to date, and the amount qualifying for asset protection.
Every insurer must file their plan with OMPP for complying with Indianas requirements for documentation prior to qualification. No contract may be approved as a qualified policy or certificate until OMPP has approved the documentation plan. The plan submitted to OMPP for approval must:
After OMPP reviews the plan of action, it will advise the department of insurance and the issuer in writing whether the issuer has any shortcomings in the plan that need to be corrected or resolved in some manner.
Auditing and Correcting Record Keeping Deficiencies
Within one year of the first date that any insured has met the criteria for an insured event, and as often as the OMPP deems necessary thereafter, OMPP will conduct a systems audit of the issuers records. It is the responsibility of the insurer to advise the OMPP when this one-year period has begun (when an insured event has occurred). Following the audit, the OMPP must notify the issuer of any inaccuracies and other potential problems discovered during the audit. The OMPP will instruct the issuer of the methods they feel are necessary to correct any problems they found. It is the responsibility of the issuer to follow those instructions.
Periodically the OMPP will reconcile a sample of individual applications to Medicaid of persons who have submitted documentation for qualification for asset protection with reports submitted by issuers. OMPP has the final decision concerning sample sizes and other auditing methods. OMPP will alert the issuers to any problems discovered and the methods they feel are necessary to correct them.
The assistant secretary of OMPP or other authorized individual may enter into voluntary arrangements with issuers of qualified long-term care insurance contracts under which the assistant secretary would issue binding determinations as to whether or not services qualify for asset protection. The insureds may submit requests for information and advice through their issuer or case management agency. When the following procedures are followed in all material respects, the written determination of the assistant secretary of OMPP for asset protection will be binding upon OMPP in all subsequent actions, and OMPP may not make any assertion contradicting these determinations in any action arising from these requirements:
If a review by the OMPP reveals deficiencies in the record keeping procedures of an issuer, the OMPP will let them know and expect them to be corrected within a reasonable length of time. If the issuer fails to make the required corrections, OMPP will notify the department of insurance of the deficiencies. The commissioner then has the right to remove the qualification status of long-term care insurance contracts, if he or she feels that is the best solution. This would not affect the asset protection in policies and certificates that were purchased while the issuer was qualified to sell them. It would affect any that were purchased after qualification was lost. In that case, the contracts sold would not have asset protection.
An insured that is applying for Medicaid will request a service summary from the issuer of their long-term care contract. Medicaid authorities will use that summary when determining eligibility for asset protection. If it is found that the contract lost its qualification due to deficiencies in the issuers record keeping procedures, and Medicaid eligibility is lost solely due to this fact, OMPP may require the issuer to pay for services counting towards asset protection required by the policyholder until the issuer has paid an amount equal to the amount of the issuers errors. After that point, if otherwise eligible, the client could qualify for Medicaid coverage.
Thank you,
United Insurance Educators, Inc.
Updated 2008