As defined by the DRA, an insured participating in a state partnership program may be eligible for an exemption to Medicaid's asset spend-down rule equal to:

• A. the total premiums paid
• B. the total lifetime benefits paid through an LTC partnership policy
• C. the cash surrender value
• D. the face value of the policy

Answer: (D)

Under Medicaid's asset spend-down rules, state long-term care partnership programs allow an exemption tied to a life insurance policy. The Deficit Reduction Act lets the policy’s face value be disregarded when calculating countable assets for eligibility. This means the amount you can exclude from assets is the policy’s face value, not the cash value, premiums paid, or benefits already paid.

So, if you have a partnership policy with a face value of $X, up to that amount can be protected in the spend-down calculation. The other options don’t provide this exclusion: premiums paid aren’t an asset to be excluded, lifetime benefits paid are expenditures, and cash surrender value is typically counted as an asset rather than exempt.

Therefore, the exemption equals the face value of the policy.