Purchasing a Partnership Policy
How to purchase a policy
The State office does not sell Partnership insurance. The State administers and monitors the Partnership program. If you wish to purchase a Partnership policy, please contact your financial advisor, insurance agent, insurance broker, and/or attorney. Currently, Partnership insurance is available from the participating insurance companies which are authorized by the New York State Department of Financial Services to market and sell these policies.
During the period covered by your private insurance coverage, you may use the policy benefits anywhere indicated in your policy. However, if you leave New York State, you must return and be a New York State resident to receive the Medicaid Extended Coverage portion. Therefore, if you know you are going to move out of state and you know you will not be coming back, these policies are not for you! Consider, then, purchasing a comprehensive, non-Partnership long-term care insurance policy.
How much coverage do I need?
How much long-term care insurance coverage a person needs depends upon several factors.
1. Cost of care
How much does long-term care (LTC), especially nursing home care, cost in the area where you may someday receive long-term care services?
Based on 2006 rates, people who live in the New York metropolitan area, including Long Island and Westchester County, face an average annual nursing home bill greater than $110,000; while those in the vicinity of Syracuse can expect to pay over $80,000, on average, for a year in a nursing home. Given the average length of stay of 2.5 years for those who enter nursing homes, downstate New Yorkers may spend over $275,000 for an average stay in a nursing home, while a person in Syracuse may spend $200,000 for an average stay. Thus, where one lives or where one is planning to receive LTC plays a part in determining how much coverage one should consider purchasing.
In higher LTC cost areas of New York State, such as the New York metropolitan area, the minimum nursing home daily benefit ($229 per day in 2010) would require a substantial, daily out-of-pocket co-payment of over $100. In lower LTC cost areas of New York, the co-payment for the minimum daily benefit amount would be lower. Check the nursing home rates map for help in determining the amount of insurance coverage you should purchase based on your out-of-pocket co-payment ability.
2. Out-of-pocket co-payment
With your LTC insurance, there are typically two out-of-pocket payments: the elimination or deductible period, and the daily out-of-pocket co-payment.
The elimination period is the number of days of out-of-pocket expenses paid by the insured for LTC services after the insurance benefits are triggered, but before the benefits are paid under the policy. Unless a 0-day elimination period is selected, an insured would have this out-of-pocket expense.
The daily out-of-pocket co-payment is the difference between the amount of daily insurance coverage purchased and the actual daily charge for the LTC services you need. This is the out-of-pocket amount the insured is required to pay to supplement the insurance benefit to meet the daily LTC costs.
Individuals are advised to calculate how much out-of-pocket co-payment they could afford to pay, preferably out of income rather than protected assets, should they need to access insurance benefits.
Keep in mind that the insurance benefit purchased under the Partnership increases by 5% annually (compounded automatically*), also the cost of care increases each year; for example, nursing home costs currently increase about 5% per year in New York.
Given one's financial circumstances in retirement, you must decide when purchasing your policy whether you will:
- Include a higher daily benefit amount with a higher premium and select a shorter elimination period, which would lower your out-of-pocket payment when you are receiving care.
- Buy a lower daily benefit amount and a longer elimination period with a lower premium cost, which would increase your out-of-pocket co-payment when you receive care.
* All New York State Partnership policies issued to people age 79 and younger automatically include inflation protection that increases the daily benefit by 5% each year, compounded. Persons age 80 and older may elect to purchase a policy without inflation protection.
3. Cost of premiums over time
Purchasing LTC insurance is a major financial decision. Keep in mind that the insurance coverage will only protect you if you keep the policy in force, generally by paying annual premiums year after year. Thus, it is essential to plan a confident method of maintaining your LTC policy whether through your own resources or with some partial contribution to premiums from those likely to benefit someday from your protected assets.
What are the other considerations?
In 1996, the federal government amended the Internal Revenue Code to allow favorable tax treatment of long-term care policies which qualify under the law. Generally, benefits you receive from tax-qualified policies will not be considered as taxable income under either federal or state law. The premiums charged for tax-qualified policies are treated as medical expenses under your federal return for purposes of itemized deductions up to certain dollar limits that are indexed annually.
In 1997, New York State passed legislation that allows favorable state tax treatment of premiums paid for policies which qualify under the federal law and meet New York minimum standards. Long-term care premium tax credit legislation was passed in 2000 and took effect in taxable years beginning in 2002. In 2004, additional legislation was passed increasing the tax credit for long-term care insurance premiums from 10% to 20% for taxable years beginning in 2004. Any policy covering long-term care services that was approved in New York and issued before January 1, 1997 also qualifies for favorable tax treatment with certain limited exceptions.
You should consult with an attorney, accountant, or tax advisor regarding the tax implications of purchasing a tax-qualified policy.
Remember, not all long-term care policies qualify for favorable tax treatment. Insurers who market tax-qualified policies may also market non-tax-qualified policies. This information can be obtained by contacting the insurance carrier.
Most insurers who sell long-term care insurance use medical underwriting to determine if they will sell you a long-term care insurance policy. Medical underwriting is a process done by insurance companies that reviews a number of factors including your health history. Long-term care insurance companies use the information gathered during the underwriting process to determine if you will be sold a policy. Long-term care insurers are not required to sell you a long-term care insurance policy if you do not meet their underwriting standards.
If you have complaints
The New York State Insurance Department regulates the insurance industry in New York and is responsible for handling consumer complaints regarding insurance in New York, including Partnership and non-Partnership long- term care insurance products, selling practices, and coverage complaints. Please go to the New York State Insurance Department website to contact them.
Tips from the Partnership office
Be a smart consumer:
- Shop around and compare policies and prices based on your needs, where you live, and what you can afford to purchase.
- Make sure the Partnership logo appears on your policy. All Partnership policies should have the Partnership logo on the front page of the insurance policy and other materials related to it.
- Make sure you sign the Consumer Participation Agreement and keep your copy. When you purchase a Partnership policy, you are required to sign the Consumer Participation Agreement in order to be enrolled in the program. The Consumer Participation Agreement is a legal contract between you and the State of New York. The Partnership office in Albany, NY receives the copy with your original signature; please keep your copy in a safe place.
- Bookmark our web site and visit here often. We will announce program-related news and updates, legislation affecting the program, events, and more as the Partnership program evolves. Visit our web site regularly to keep yourself up-to-date about Partnership program developments and information.
- Call the state's toll-free hotline for basic questions about the Partnership policies and to find out which insurance companies offer them: 1-866-950-7526
Write:NYS Partnership for Long-Term Care
Department of Health, OHIP
ESP, Corning Tower, Room 1970
Albany, New York 12237