DEPARTMENT OF HEALTH & HUMAN SERVICES  
Centers for Medicare & Medicaid Services  
7500 Security Boulevard, Mail Stop S2-26-12  
Baltimore, Maryland   21244-1850  
  
 
Center for Medicaid and State Operations  
 
July 27, 2006                    SMDL #06-019  
  
  
Dear State Medicaid Director:  
  
This letter is one of a series that provides guidance on the implementation of the Deficit Reduction Act 
of 2005 (DRA), Pub. L. 109-171.  The legislation made a number of changes in the Medicaid rules on 
eligibility and benefits.  This letter provides information for States regarding implementation of section 
6021 of the DRA.  Section 6021 amends section 1917(b) of the Social Security Act (the Act) to provide 
for Qualified State Long-Term Care (LTC) Insurance Partnership programs, and permits an exception 
to estate recovery provisions with respect to individuals who receive benefits under LTC insurance 
policies sold in States that implement a Partnership program.  These changes are described briefly 
below and are discussed in detail in the enclosure to this letter.    
  
Qualified Partnerships 
  
A Qualified State LTC Insurance Partnership (Qualified Partnership) means an approved State plan 
amendment (SPA) that provides an exemption from estate recovery in an amount equal to the benefits 
paid by certain LTC insurance policies, where those benefits were disregarded in determining an 
individuals Medicaid eligibility.  Policies must meet specific conditions and the State Insurance 
Commissioner, or appropriate State official, must certify that a policy meets those conditions, in order 
for the State to apply the exemption from estate recovery.  The term Qualified Partnership refers to 
Partnership SPAs, other than those approved as of May 14, 1993.  However, those States that had 
approved Partnership SPAs as of May 14, 1993, continue to be Partnership States, as long as they 
have not relaxed the consumer protection standards that were applied under their State plans as of 
December 31, 2005.  
  
Effective Dates 
  
A State plan amendment that provides for a Qualified Partnership under section 1917(b)(1)(C)(iii) of 
the Act can specify that policies issued after a certain date will be subject to the amendment, as long as 
that date is not earlier than the first day of the first calendar quarter in which the SPA is submitted for 
approval.    
  
 
 
  Page 2 - State Medicaid Director  
  
I am enclosing a more detailed explanation of the above DRA provisions.  If you have any 
questions about this letter, or the enclosure, please feel free to contact Gale Arden, Director, 
Disabled & Elderly Health Programs Group at (410)786-6810, or by e-mail at 
Gale.Arden@cms.hhs.gov .  We look forward to working with you as you implement this 
legislation.  
  
Sincerely,  
  
 /s/ 
  
Dennis G. Smith  
Director  
  
Enclosure  
  
cc:  
  
CMS Regional Administrators  
  
CMS Associate Regional Administrators  
    for Medicaid and State Operations  
  
Martha Roherty       
Director, Health Policy Unit  
American Public Human Services Association  
  
Joy Wilson  
Director, Health Committee  
National Conference of State Legislatures  
  
Matt Salo  
Director of Health Legislation  
National Governors Association  
  
Jacalyn Bryan Carden  
Director of Policy and Programs  
Association of State and Territorial Health Officials  
  
Christie Raniszewski Herrera  
Director, Health and Human Services Task Force  
American Legislative Exchange Council  
  
  
   Page 3  State Medicaid Director  
  
Lynne Flynn  
Director for Health Policy  
Council of State Governments