Long-term care
Long-Term Care Partnership Programs: How They Protect Your Assets from Medicaid Spend-Down
Long-term care partnership programs are joint efforts between states and private insurers. If you buy a partnership-qualified policy and later use up its benefits, you can keep extra assets, one dollar for every dollar the policy paid, and still qualify for Medicaid long-term care. It’s one of the few ways to protect savings from Medicaid spend-down without giving assets away.
This guide explains how partnership policies work, the inflation protection rules, a worked example, and what to check before buying.
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How partnership policies work
A partnership policy is a tax-qualified long-term care policy that meets state partnership rules. When you apply for Medicaid after using the policy, the state disregards assets equal to the benefits the policy paid. For example, if the policy paid $300,000, you could keep $300,000 more in assets than Medicaid normally allows (LTC News). Medicaid’s income rules still apply.
Worked example
Illustrative only: you have $450,000 in countable assets and a partnership policy that pays $400,000 in benefits before running out. When you apply for Medicaid, $400,000 is disregarded, so only $50,000 counts. You’d spend down that $50,000 to the state’s limit, rather than nearly all $450,000. If your policy had paid $300,000 and your assets were $250,000, all of them would be protected (LTC News).
Inflation protection rules
- Age 60 and under at purchase: compound inflation protection is required.
- Ages 61 to 75: some form of inflation protection, compound or simple, is required.
- Age 76 and older: inflation protection is optional.
Source: LTC News. Inflation protection raises the premium but keeps benefits closer to rising care costs.
Where partnership programs are available
Most states offer partnership programs, including Arizona. Rules differ, and many states recognize partnership policies bought in other partnership states, but not all, so check before you move. Ask the insurer to confirm in writing that a policy is partnership-qualified in your state.
Pros and cons
- Pros: protects assets beyond normal Medicaid limits, works with standard long-term care insurance, and doesn’t require giving assets away.
- Cons: premiums can rise like other traditional policies, required inflation protection adds cost, and Medicaid income rules still apply.
Partnership vs. other approaches
| Approach | How it protects assets | Trade-off |
|---|---|---|
| Partnership LTC policy | Asset disregard equal to benefits paid | Premiums can rise; inflation protection required |
| Non-partnership LTC policy | Pays for care, slowing spend-down | No extra Medicaid asset protection |
| Hybrid life/LTC | Care benefits plus a death benefit | Usually not partnership-qualified; large premium |
| Gifting or trusts | Moves assets out of your name | Five-year look-back; loss of control; legal advice needed |
Who partnership policies fit best
Partnership policies tend to fit middle-income households with savings they want to protect, often between about $100,000 and $1 million, who can afford traditional long-term care premiums. Very wealthy households may self-fund, and households with few assets may rely on Medicaid. If you’re in between, a partnership policy can stretch both your savings and your coverage.
Before you buy
- Confirm the policy is partnership-qualified in your state.
- Make sure the inflation protection meets your age’s requirement.
- Compare total benefit pools; larger pools protect more assets.
- Ask about the insurer’s history of premium increases.
- If you might move, ask whether your new state honors the policy.
How to buy a partnership policy
- Ask an agent for partnership-qualified quotes from several insurers; not every policy or insurer offers them.
- Choose a daily or monthly benefit, a benefit period, and an elimination period.
- Select inflation protection that meets your age’s requirement.
- Complete medical underwriting; approval depends on your health.
- Keep the partnership certification with your policy documents, and tell your family where it is.
Common mistakes to avoid
- Assuming any long-term care policy is partnership-qualified; it must be certified.
- Dropping inflation protection to save money, which can cost the partnership status for younger buyers.
- Choosing a small benefit pool, which limits how much the partnership can protect.
- Letting the policy lapse; protection only counts for benefits actually paid by an in-force policy.
- Moving assets before talking with an elder law attorney, since transfers can trigger Medicaid penalties.
Partnership program FAQs
What is a long-term care partnership policy?
A qualified long-term care policy that lets you protect assets equal to the benefits paid if you later need Medicaid.
How much can a partnership policy protect?
Generally one dollar of assets for every dollar of benefits the policy paid.
Does Arizona have a partnership program?
Yes. Arizona offers long-term care partnership policies.
Do partnership policies require inflation protection?
Yes for most buyers: compound protection at 60 and under, and some protection from 61 to 75.
Can I keep a partnership policy if I move?
Many states honor policies from other partnership states, but check before you move.
Does a partnership policy protect income?
No. Medicaid income rules still apply.
How do I know if a policy is partnership-qualified?
Ask the insurer to confirm in writing and check that it meets your state’s rules.
Are hybrid policies partnership-qualified?
Usually not; partnership programs generally apply to traditional tax-qualified long-term care policies.
Related guides
Important information
Compensation. The link in the partner quote box near the top of this page is sponsored, and Blake Insurance Group may be paid if you make a purchase. Sponsored placement does not affect the other information on this page.
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Cost and program figures. Care costs, Medicare and Medicaid amounts, and tax limits are cited from the sources named, for the years shown, and change regularly. Examples are illustrative, not quotes; your price depends on the insurer, your age, health, and the coverage you choose.
Not tax, legal, or Medicaid planning advice. Rules summarized here are general information as of November 2026. Talk with a tax professional or elder law attorney about your situation.
Availability. Coverage, prices, discounts, and eligibility vary by insurer, state, and applicant, and are subject to underwriting. The issued policy controls.
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