Long-Term Care Insurance Coverage
Private Long-Term Care Insurance: The Medicaid Interaction
Research Report
Enid Kassner, AARP Public Policy Institute
May 2004
What happens when the costs of long term care services exceed one's insurance benefit, available income, and assets? Presumably the Medicaid program is then available to finance services. Or is it?
Most people who purchase private long term care insurance do so in the hope of maximizing their choices, protecting their assets, and avoiding Medicaid. However, those whose policies prove to be inadequate to cover the cost of care may find that they have "fallen in the cracks," at a disadvantage both in qualifying for Medicaid and in paying for nursing home care privately. Medicaid treats insurance reimbursements as income, which has led to reports of individuals canceling their insurance policy for long term care in order to qualify for Medicaid. Rationalizing the way state Medicaid programs treat private long term care insurance payments could ultimately save Medicaid dollars.
This issue brief, by Enid Kassner of the AARP Public Policy Institute, addresses the unintended consequences that sometimes occur in the interaction of Medicaid and private long term care insurance, discusses their implications for public policy, and describes some actions to address potential problems. (8 pages)
Pub ID: IB68