Implementation of the Maine Long-Term Care Partnership Program

BULLETIN 368

Implementation of the

Maine Long-Term Care Partnership Program

(Supersedes Bulletin 362)

This Bulletin explains the implementation of the Maine Long-Term Care Partnership Program,

established pursuant to 22 M.R.S.A. § 3174-GG, and the procedures to be followed by insurers

in order to comply with the requirements of the Partnership Program and applicable federal law.

The Partnership Program operates under the direction of the Maine Department of Health and

Human Services in consultation with the Maine Bureau of Insurance.

This Bulletin replaces Bulletin 362. The inflation protection guidelines have been revised to offer

additional consumer choices and to provide greater consistency among Partnership states, and

additional explanatory material has been added in response to questions about the retroactive

effective date of the program, interstate reciprocity, and the inflation protection requirements.

Federal enabling legislation for the Long-Term Care Partnership Program is set forth in the

Deficit Reduction Act of 2005, Pub. L. 109-171 (the “DRA”), and implementing procedures are

described in guidance issued by the Centers for Medicare and Medicaid Services (CMS).

Under Maine’s Long-Term Care Partnership Program, individuals who purchase long-term care

insurance policies that meet certain requirements specified by the DRA (“Partnership Policies”)

can apply for MaineCare assistance under special rules for determining financial eligibility and

estate recoveries. (In the case of group insurance, each certificate that meets the DRA’s

requirements is considered a Partnership Policy.) These special rules generally allow an

individual to protect assets equal to the insurance benefits received from a Partnership Policy so

that such assets will not be taken into account in determining financial eligibility for MaineCare

and will not subsequently be subject to MaineCare liens and recoveries

each certificate that meets the DRA’s

requirements is considered a Partnership Policy.) These special rules generally allow an

individual to protect assets equal to the insurance benefits received from a Partnership Policy so

that such assets will not be taken into account in determining financial eligibility for MaineCare

and will not subsequently be subject to MaineCare liens and recoveries.

The Maine Long-Term Care Partnership Program, approved by CMS on November 10, 2009, has

a retroactive effective date of July 1, 2009.

A. Asset Protection Provided. Under the Maine Long-Term Care Partnership Program, the

asset eligibility, adjustment, and recovery provisions of the MaineCare plan are modified

by disregarding an amount of assets, above and beyond the asset disregard or allowance

otherwise provided under the MaineCare plan, equal to the amount of insurance benefits

received from a Partnership Policy.

This Asset Disregard applies to all insurance benefits received from a Partnership Policy,

regardless of the mode of payment, as discussed more fully in B(1) below. It applies to all

insurance benefits received from a Partnership Policy even if they are for costs that would

not be covered by MaineCare. The Asset Disregard as of any date equals the insurance

benefit that has been received to that date from a Partnership Policy, and is subject to

adjustment if additional insurance benefits are received.

If a previously issued policy is exchanged for a new policy after the effective date of the

Maine Long-Term Care Partnership Program, and the new policy qualifies as a

Partnership Policy, the Asset Disregard will apply only with respect to insurance benefits

received under the new Partnership Policy and does not include insurance benefits, if any,

received under the previously issued policy.

Partnership Policies that cover more than one insured are treated separately for each

insured

aine Long-Term Care Partnership Program, and the new policy qualifies as a

Partnership Policy, the Asset Disregard will apply only with respect to insurance benefits

received under the new Partnership Policy and does not include insurance benefits, if any,

received under the previously issued policy.

Partnership Policies that cover more than one insured are treated separately for each

insured. The Asset Disregard for each insured equals the insurance benefits received from

the Partnership Policy on account of that insured having become a “chronically ill

individual” within the meaning of § 7702B(c)(2) of the Internal Revenue Code of 1986.1

The Asset Disregard does not include return of premium payments made upon the

termination of a Partnership Policy (due to cancellation or death), because such payments

do not represent insurance benefits.

Eligibility for benefits under MaineCare remains subject to all other eligibility

requirements, such as applicable income limitations and home equity limitations.

B. Partnership Policies. A Partnership Policy is a long-term care insurance contract that

satisfies all of the following requirements. It may take the form of a stand-alone long-

term care policy, a certificate to a group policy, or a long-term care provision of another

type of insurance contract, such as a rider to a life insurance or annuity contract.

1. Qualified under federal tax law. The policy must be a qualified long-term care

insurance contract for tax purposes, as defined in Internal Revenue Code §

7702B(b).

2. Effective date. The policy must have an effective date that is no earlier than July

1, 2009, the effective date of the Maine Long-Term Care Partnership Program.

For a certificate issued under a group insurance contract, the relevant effective

date is the effective date of the certificate.

Policies not originally issued as Partnership Policies may be exchanged for

qualified policies after the effective date of the Maine Long-Term Care

Partnership Program

no earlier than July

1, 2009, the effective date of the Maine Long-Term Care Partnership Program.

For a certificate issued under a group insurance contract, the relevant effective

date is the effective date of the certificate.

Policies not originally issued as Partnership Policies may be exchanged for

qualified policies after the effective date of the Maine Long-Term Care

Partnership Program. The policy received in exchange is treated as newly issued

and thus is eligible for Partnership Policy status. The addition of a rider,

endorsement, or change in schedule page to an in-force policy, for the purpose of

meeting Long-Term Care Partnership requirements, constitutes a qualifying

policy replacement if the effective date of the policy revision is on or after July 1,

2009. A policy issued after July 1, 2009, is eligible for Partnership status if it

meets the requirements described in this Section and the policy form has been

certified in accordance with Section C.

An insurer may not impose additional underwriting requirements or place the

insured in a less favorable rating plan or classification in order to reissue pre-

Partnership coverage as a Partnership Policy. If a policy is rated on an issue age

basis, then the rate at issue of the original policy must continue to apply. If

additional inflation protection benefits are required in order to qualify for

Partnership Policy status, the charge for those benefits must be consistent with the

insured’s existing rating plan and classification. However, if the policyholder or

certificate holder has requested benefit changes or new benefits beyond the

Partnership Policy requirements, the insurer may apply its generally applicable

underwriting and rating standards to that request.

3. State of residence. The policy must cover an insured who was a resident of Maine

when coverage first became effective under the policy

nd classification. However, if the policyholder or

certificate holder has requested benefit changes or new benefits beyond the

Partnership Policy requirements, the insurer may apply its generally applicable

underwriting and rating standards to that request.

3. State of residence. The policy must cover an insured who was a resident of Maine

when coverage first became effective under the policy. A certificate covering an

insured who is a resident of Maine may qualify as a Partnership Policy even if the

situs of the underlying group insurance contract is in another state. An insured

who moves to Maine after buying a Partnership Policy in a different state may

qualify for reciprocal treatment as described below in Section H, if the state

participates in reciprocity, or the insured may exchange the policy for a Maine

Partnership Policy.

4. Consumer protection requirements. The policy must satisfy the federal consumer

protection requirements of Social Security Act (“SSA”) § 1917(b)(1)(C)(iii)(III)

(42 U.S.C. § 1396p(b)(1)(C)(iii)(III)), which incorporates by reference designated

provisions of the Model Act and Model Regulation adopted by the National

Association of Insurance Commissioners. See Section C below for a discussion of

the certification process.

5. Inflation protection. Pursuant to SSA § 1917(b)(1)(C)(iii)(IV) (42 U.S.C. §

1396p(b)(1)(C)(iii)(IV)), the policy must provide inflation protection if the

insured individual has not attained age 76 as of the purchase date of his or her

policy or certificate. Every insurer must also offer each policyholder or certificate

holder, regardless of age, the option to buy a higher level of inflation protection

consistent with the requirements of Bureau of Insurance Rule 425

S.C. §

1396p(b)(1)(C)(iii)(IV)), the policy must provide inflation protection if the

insured individual has not attained age 76 as of the purchase date of his or her

policy or certificate. Every insurer must also offer each policyholder or certificate

holder, regardless of age, the option to buy a higher level of inflation protection

consistent with the requirements of Bureau of Insurance Rule 425. As discussed

more fully in Bulletin 369, the required levels of inflation protection are:

•

Through age 60: either compound interest of at least 3% or benefits linked

to the consumer price index (CPI-U);

•

Ages 61 through 75: simple or compound interest of at least 3% or

benefits linked to the consumer price index (CPI-U);

•

Age 76 and higher: no inflation protection required.

In the case of an exchange, the level of inflation protection required is based upon

the effective date of coverage under the new policy; i.e., the determination is

made without regard to any predecessor policy.

C. Certification Process. Pursuant to SSA § 1917(b)(5)(B)(iii) (42 U.S.C. §

1396p(b)(5)(B)(iii)), a qualified long-term care insurance policy is deemed to meet the

consumer protection requirements of the applicable model laws if the Maine

Superintendent of Insurance certifies, in a manner established by the Maine Partnership

Program and satisfactory to the Secretary of the U.S. Department of Health & Human

Services (the “Secretary”), that the policy meets those requirements.

The Maine Long-Term Care Act and Bureau of Insurance Rule 425 are based on the

applicable model laws. The checklist includes provisions based on each of the model law

provisions referenced in 42 U.S.C. § 1396p(b)(1)(C)(iii)(III). The Superintendent has

determined that compliance with the provisions of Maine law cited in the checklist is

sufficient to satisfy the corresponding federal requirements

Maine Long-Term Care Act and Bureau of Insurance Rule 425 are based on the

applicable model laws. The checklist includes provisions based on each of the model law

provisions referenced in 42 U.S.C. § 1396p(b)(1)(C)(iii)(III). The Superintendent has

determined that compliance with the provisions of Maine law cited in the checklist is

sufficient to satisfy the corresponding federal requirements.

Therefore, in accordance with the statutory safe harbor procedure, subject to the

Secretary’s authority to issue further guidance clarifying or superseding this Bulletin,

policies shall be deemed to meet the consumer protection requirements of SSA §

1917(b)(1)(C)(iii)(III) (42 U.S.C. § 1396p(b)(1)(C)(iii)(III)) if the issuer identifies the

policy forms on which such policies are issued, completes the applicable Bureau of

Insurance form filing checklist for each policy form, and an officer of the issuer certifies

to the Superintendent that the information provided in the checklist is complete and

accurate.

If there is a change made by the National Association of Insurance Commissioners to its

Long-Term Care Insurance Model Act or Regulation that affects these consumer

protection standards, and the Secretary makes the change applicable to Partnership

Policies pursuant to SSA § 1917(b)(5)(C) (42 U.S.C. § 1396p(b)(5)(C)), then any

necessary modifications will be made to the checklist to reflect the new requirements.

The checklist also includes verification of the level of inflation protection provided by the

form or rider, to identify which groups of consumers may be offered the policy as a

Partnership Policy.

D. Notice of Partnership Policy Status. Pursuant to the Maine Long-Term Care

Partnership Program as approved by CMS, the Maine Department of Health and Human

Services relies where appropriate on attestations by the Superintendent that a policy is a

Partnership Policy

ction provided by the

form or rider, to identify which groups of consumers may be offered the policy as a

Partnership Policy.

D. Notice of Partnership Policy Status. Pursuant to the Maine Long-Term Care

Partnership Program as approved by CMS, the Maine Department of Health and Human

Services relies where appropriate on attestations by the Superintendent that a policy is a

Partnership Policy. A Partnership Policy issued in Maine or issued for delivery in Maine

shall be accompanied by a Partnership disclosure notice explaining the benefits

associated with a Partnership Policy and indicating that at the time issued, the policy is

intended to be a Partnership Policy. If a policy form is certified pursuant to Section C

after it is already in use in Maine, the insurer shall send the Partnership disclosure notice

to all eligible individuals who have purchased the policy on or after July 1, 2009. The

Partnership disclosure notice shall include a statement indicating that by purchasing a

Partnership Policy, the insured does not automatically qualify for MaineCare.

The issuer may provide written notice to the insured using the model notice (based on

one used in other partnership states) that is attached to this Bulletin as an Appendix, and

can be found at the Maine Bureau of Insurance website at

http://www.maine.gov/pfr/insurance. A substantially similar notice may be used with the

prior approval of the Superintendent.

omatically qualify for MaineCare.

The issuer may provide written notice to the insured using the model notice (based on

one used in other partnership states) that is attached to this Bulletin as an Appendix, and

can be found at the Maine Bureau of Insurance website at

http://www.maine.gov/pfr/insurance. A substantially similar notice may be used with the

prior approval of the Superintendent.

The Partnership disclosure notice shall not be sent to individuals for whom the policy

does not provide sufficient inflation protection, based on their age at the time the policy is

sold. If the notice is sent in error, the insurer shall take prompt corrective action and offer

the policyholder the choice between upgrading to Partnership coverage, rescinding the

purchase, or keeping the existing non-Partnership policy.

In determining whether to provide notice that specifically references the Maine Long-

Term Care Insurance Partnership, the issuer may rely upon a statement by the insured

that he or she is a resident of Maine.

E. Limitation on Partnership-Policy-Specific Rules. In accordance with SSA §

1917(b)(1)(C)(iii)(VII) (42 U.S.C. § 1396p(b)(1)(C)(iii)(VII)), apart from the

requirements described in B above that are specified by the DRA, no requirement

affecting the terms or benefits of a Partnership Policy may be imposed unless the same

requirement is imposed generally on long-term care insurance policies without regard to

whether the policy is a Partnership Policy. This limitation does not exempt Partnership

Policies or their issuers from compliance with Maine Bureau of Insurance Rule 425 or

any other requirements of general applicability.

F. Reporting Requirements. Pursuant to SSA § 1917(b)(1)(C)(iii)(VI) (42 U.S.C. §

1396p(b)(1)(C)(iii)(VI)), issuers of Partnership Policies must provide regular reports to

the Secretary in accordance with any regulations of the Secretary

not exempt Partnership

Policies or their issuers from compliance with Maine Bureau of Insurance Rule 425 or

any other requirements of general applicability.

F. Reporting Requirements. Pursuant to SSA § 1917(b)(1)(C)(iii)(VI) (42 U.S.C. §

1396p(b)(1)(C)(iii)(VI)), issuers of Partnership Policies must provide regular reports to

the Secretary in accordance with any regulations of the Secretary. On December 18,

2008, the Secretary promulgated regulation 45 CFR Part 144 Subchapter B, effective

April 17, 2009, which enacted the reporting requirements for insurers that issue qualified

long-term care insurance policies in states that have established a Long-Term Care

Partnership Program. Carriers should consult this regulation for all reporting

requirements under the Maine Long-Term Care Partnership Program. Pursuant to SSA §

1917(b)(1)(C)(V) (42 U.S.C. § 1396p(b)(1)(C)(V)), the Secretary, as appropriate, will

provide copies of the reports to the State of Maine.

G. Producer Training and Coordination Between State Departments. The Maine Bureau

of Insurance has the responsibility to assure that anyone who sells a Partnership Policy

receives training and demonstrates evidence of an understanding of such policies and

how they relate to other public and private coverage of long-term care. The Maine

Department of Health and Human Services, as the designated program supervisor

pursuant to SSA § 1902(a)(5) (42 U.S.C. § 1396a(a)(5)), shall provide information and

technical assistance to the Bureau in carrying out this responsibility.

The training requirements established by the Superintendent are specified in Maine

Bureau of Insurance Bulletin 347, Producer Training – Long-Term Care Insurance

Policies.

H. Reciprocity

n Services, as the designated program supervisor

pursuant to SSA § 1902(a)(5) (42 U.S.C. § 1396a(a)(5)), shall provide information and

technical assistance to the Bureau in carrying out this responsibility.

The training requirements established by the Superintendent are specified in Maine

Bureau of Insurance Bulletin 347, Producer Training – Long-Term Care Insurance

Policies.

H. Reciprocity. Pending the issuance of guidance by the Secretary pursuant to Subsection

6021(b) of the DRA, the Maine Long-Term Care Partnership Program shall provide

reciprocity with all other state long-term care insurance partnerships that provide similar

reciprocity for Maine Partnership Policies.

A policy purchased under a reciprocal state’s long-term care insurance partnership shall

be entitled to the same Asset Disregard that would apply to a Partnership Policy covered

directly by the Maine Long-Term Care Partnership Program. The provision of reciprocity

under the Maine Long-Term Care Partnership Program does not affect eligibility

requirements for MaineCare benefits that apply apart from those pertaining to permissible

assets and resources.

After the issuance of guidance by the Secretary pursuant to DRA § 6021(b), the Maine

Medicaid Agency, if it elects to be exempt from the federal standards, shall notify the

Secretary in writing within the period of time prescribed by the Secretary.

I. Federal Long-Term Care Insurance Program. The Superintendent recognizes that the

enabling law for the Federal Long-Term Care Insurance Program (“FLTCIP”), 5 U.S.C.

§§ 9001–9009, provides for the preemption of state laws with respect to this program.

Therefore, a certification by the Director of the U.S. Office of Personnel Management

that a certificate issued pursuant to the FLTCIP qualifies as a Partnership Policy shall be

sufficient to qualify the certificate for the Asset Disregard.

1 The Internal Revenue Code is Title 26 of the United States Code, with the same numbering

scheme

preemption of state laws with respect to this program.

Therefore, a certification by the Director of the U.S. Office of Personnel Management

that a certificate issued pursuant to the FLTCIP qualifies as a Partnership Policy shall be

sufficient to qualify the certificate for the Asset Disregard.

1 The Internal Revenue Code is Title 26 of the United States Code, with the same numbering

scheme.

January 22, 2010

_______________________

Mila Kofman

Superintendent of Insurance

NOTE: This bulletin is intended solely for informational purposes. It is not intended to set forth

legal rights, duties, or privileges, nor is it intended to provide legal advice. Readers should

consult applicable statutes and rules and contact the Bureau of Insurance if additional

information is needed.

APPENDIX

[Company Letterhead]

IMPORTANT NOTICE REGARDING YOUR POLICY’S

LONG-TERM CARE INSURANCE PARTNERSHIP STATUS

(Please Keep This Notice with Your Policy or Certificate)

Policy Number ____________

Insured’s Name_______________

The Maine Long-Term Care Partnership Program is a partnership between Maine and

private insurers offering long-term care insurance policies. The Maine Long-Term Care

Partnership Program became effective on July 1, 2009, and is provided in accordance with the

federal Deficit Reduction Act of 2005 (P.L. 109-171).

Notice of Partnership Policy Status. This Notice verifies that the long-term care insurance

policy or certificate that you have purchased is intended to qualify under the Maine Long-Term

Care Partnership Program as of the policy’s or certificate’s effective date. This Notice explains

the valuable MaineCare (Medicaid) asset protection that you may receive from purchasing a

Partnership Policy. The purchase of a Partnership Policy does not automatically qualify you for

MaineCare.

MaineCare Asset Protection. Long-term care insurance is an important tool that helps

individuals prepare for future long-term care needs

olicy’s or certificate’s effective date. This Notice explains

the valuable MaineCare (Medicaid) asset protection that you may receive from purchasing a

Partnership Policy. The purchase of a Partnership Policy does not automatically qualify you for

MaineCare.

MaineCare Asset Protection. 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 the MaineCare program if assistance under this program is

ever needed and you otherwise qualify for MaineCare.

Specifically, when your assets are calculated for purposes of the eligibility and recovery

provisions of the MaineCare program, MaineCare will disregard an additional amount of assets

that is equal to the amount of 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 MaineCare eligibility. Other MaineCare eligibility requirements

regarding assets and income must still be met. Medicaid eligibility requirements may vary from

one state to another and may change over time.

Additional Consumer Protections. In addition to providing MaineCare asset protection, your

Partnership Policy has other important features. Under the rules governing the Maine Long-Term

Care Partnership Program, 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 these tax benefits

are not exclusive to Partnership Policies

mportant features. Under the rules governing the Maine Long-Term

Care Partnership Program, 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 these tax benefits

are not exclusive to Partnership Policies. A policy can be a qualified long-term care insurance

contract under federal tax law even if it is not a Partnership Policy.) In order to qualify for the

Partnership Program, your policy must also contain certain inflation protections if sold to you

under age 76, with stronger protections required if you are under age 61.

What Could Disqualify Your Policy as a Partnership Policy. If you make any changes to your

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 policy to determine the effect of a proposed change. In addition, if you move to a state

that does not maintain a Partnership program 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.

Additional Information. If you would like further information about the MaineCare asset

protection provided by your Partnership Policy, please contact the Maine Department of Health

and Human Services at (207) 287-3707 or visit their website at http://www.maine.gov/dhhs. If

you would like further information about the Maine Long-Term Care Partnership Program,

please call the Maine Bureau of Insurance at (800) 300-5000 (in state) or (207) 624- 8458 or visit

their website at http://www.maine.gov/pfr/insurance.