Long-Term Care Partnership Program
The Long-Term Care Partnership Program is a state-federal initiative that allows individuals who purchase a qualifying private long-term care insurance policy to protect a corresponding amount of assets from Medicaid spend-down requirements — enabling them to access Medicaid long-term care benefits while retaining assets that would otherwise need to be depleted first.
Long-term care costs represent one of the most significant uninsured financial risks in retirement planning. The national median annual cost of a private nursing home room exceeded $108,000 in 2024, and many individuals require two or more years of care — with some conditions, such as Alzheimer's disease, requiring a decade or more of continuous supervision and personal care services. Traditional Medicare does not cover custodial long-term care (assistance with activities of daily living), and private health insurance excludes it. Medicaid does cover long-term care, but only after the individual has depleted most of their assets to a very low threshold.
The Long-Term Care Partnership Program was established to incentivize private long-term care insurance purchase by creating an asset protection benefit coordinated with Medicaid. Under the partnership model, a qualifying partnership policy provides a dollar-of-asset-protection for every dollar of benefits paid out. If a partnership policy pays $200,000 in benefits and the insured has depleted those benefits and still requires care, the individual can apply for Medicaid while retaining $200,000 of assets that would otherwise need to be spent down to Medicaid eligibility levels. This dollar-for-dollar asset protection is called an asset disregard or asset protection feature.
Partnership policies must meet specific requirements to qualify: they must be tax-qualified long-term care policies under IRC Section 7702B, include inflation protection provisions (typically 3–5% compound inflation protection for individuals under a certain age at purchase), and be sold in a state that has adopted partnership regulations. Most states have established partnership programs since federal law allowed broad expansion in 2006; a handful of states still do not participate.
The reciprocity feature of recent partnership programs allows asset protection earned in one state to be recognized in another state if the insured moves — addressing a limitation of early partnership programs that were state-specific.
From a planning perspective, partnership policies sit at the intersection of insurance, estate planning, and Medicaid strategy. For individuals with moderate assets who want to avoid spending all their savings on long-term care before becoming Medicaid-eligible — while also preserving a meaningful inheritance — the partnership model creates a structured path to achieve both objectives through private insurance rather than relying solely on Medicaid at the outset.