State partnership program refers to long-term care insurance partnership initiatives jointly sponsored by states and the federal government. These programs allow policyholders who purchase qualifying LTC policies to protect a portion of their assets from Medicaid spend-down requirements if they later need to apply for Medicaid to cover long-term care costs. For every dollar of benefits paid by a partnership-qualified policy, a dollar of personal assets can be disregarded for Medicaid eligibility, up to specified limits. Partnership policies must meet certain inflation protection and consumer protection standards defined by each state's program.

Advisors discuss state partnership programs when recommending stand-alone LTC policies or some qualifying hybrid products in states that participate. They explain how partnership status can provide an additional layer of asset protection beyond policy benefits, especially for middle-income clients worried about needing extended care. Advisors verify partnership requirements, which can differ by state and age at purchase, and make sure clients understand that partnership does not guarantee Medicaid eligibility but may improve asset protection if eligibility is otherwise met. Understanding state partnership programs helps advisors integrate LTC coverage with Medicaid planning considerations in a compliant, transparent manner.