LTCi Partnership Benefit Adustment for CA

For the first time since inception in 1998, the CA Partnership for Long-Term Care announced a decrease in the minimum daily benefit amount (DBA) allowable for Partnership policies, effective January 1, 2013.  The minimum DBA will go from $180/day to $170/day.

Existing Partnership policy owners that want to reduce their daily benefit for whatever reason will now be able to do so down to $170/day and still keep intact the asset protection of the Partnership policy.  This also applies to multi-life policies that were written as Partnership contracts.

There has not yet been any explanation for this action, but one might guess that reality is setting in with the four “charter” Partnership states (CA, IN, CT, and NY).  Some provisions in the initial compact have had the unintended consequence of driving the middle class out of an affordable price range for coverage.  This has historically been the very market the Partnership was intended to target.

My guess is that the annual increase in DBA for Partnership will soon become a thing of the past in the other three states, as well.  With a minimum DBA of $180, the CA Partnership plan was starting to go beyond the estimated averages for some types of long-term care costs in certain parts of the state.  Over the years, close annual scrutiny of costs other than for facility care have shown that care those costs have not increased as much as was originally expected.  Such other costs include domestic assistance, certified care-giving, and adult day care. 

So far, this move has had no bearing on the moving non-taxable amount of maximum DBA payment for LTC costs.  For 2013, LTCi payments from indemnity (cash) policies that exceed the per diem limit of $320 may be taxable as regular income.  This year, that limit is $310/day.