Sec. 31.14.03.09. Partnership Policy Status Disclosure Notice

The format and required text of the Partnership Policy Status Disclosure Notice referred to in Regulation .05C(3) of this chapter shall read as follows:

[Carrier letterhead]

Important Notice Regarding Your Policy's Long-Term Care Insurance Partnership Policy Status

(Please keep this Notice with Your Policy or Certificate)

Qualified State Long-Term Care Insurance Partnership. The Qualified State Long-Term Care Insurance Partnership is an innovative partnership between Maryland and private insurers of long-term care insurance policies. The Qualified State Long-Term Care Insurance Partnership is established in accordance with the Deficit Reduction Act of 2005 (P.L. 109-171).

Notice of Partnership Policy Status. Your long-term care insurance {policy} {certificate} is intended to qualify as a Partnership {policy} {certificate} under the {insert state} Long-Term Care Partnership Program as of your {policy's} {certificate's} effective date.

Medicaid Asset Protection Provided. Long-term care insurance is an important tool that helps individuals prepare for future long-term care needs. Partnership Policies provide an additional level of protection. In particular, such policies permit individuals to protect additional assets from spend-down requirements under a Medicaid program if assistance under this program is ever needed and you otherwise qualify for Medicaid.

Specifically, the asset eligibility and recovery provisions of the Medicaid program of Maryland are applied by disregarding an additional amount of assets which is equal to the amount of long-term care insurance benefits you have received from your Partnership Policy. For example, if you receive $200,000 of insurance benefits from your Partnership Policy, you generally would be able to retain $200,000 of assets above and beyond the amount of assets normally permitted for Medicaid eligibility.

Other Medicaid eligibility requirements apart from permissible assets must be met, including special rules that may apply if the equity in your home exceeds $500,000. This equity value limit may change over time based on Federal standards. In addition, you must meet the Medicaid program's income requirements and may be required to contribute some of your income to the costs of your care once you become eligible for Medicaid.

Additional Consumer Protections. In addition to providing Medicaid asset protection, your Partnership Policy has other important features. Under the rules governing the Qualified State Long-Term Care Insurance Partnership, your Partnership Policy must be a qualified long-term care insurance contract under Federal tax law, and as such the insurance benefits you receive from the policy generally will be subject to beneficial income tax treatment. (Please note that a policy can be a qualified long-term care insurance contract under Federal tax law, with the same beneficial income tax treatment, even if it is not a Partnership Policy.) In addition, if you were under age 76 when you purchased your Partnership Policy, it must provide inflation protection to help protect against potential future increases in the cost of long-term care. (For older purchasers, an offer of inflation protection is required.)

What Could Disqualify Your Policy as a Partnership Policy. If you make any changes to your Partnership Policy or certificate, such changes could affect whether your policy or certificate continues to qualify as a Partnership Policy. Before you make any changes, you should consult with the issuer of your Partnership Policy to determine the effect of a proposed change. In addition, if you move to a state that does not maintain a Qualified Partnership or does not recognize your policy as a Partnership Policy, you would not receive Medicaid asset protection in that state. Also, changes in Federal or State law could affect the Medicaid asset protection available with respect to your Partnership Policy.