The Long-Term Care Partnership program originated in the 1980s and at that time was implemented in four states: New York, California, Connecticut and Indiana. The partners were the insurance companies and the states and the state Medicaid departments. Policies that met the requirements of one of these states allowed buyers to shelter assets from Medicaid (asset disregard), in case they exhausted their Long-Term Care Insurance benefits and then became Medicaid beneficiaries.

The program was expanded when President George W. Bush signed the Deficit Reduction Act which expanded the program in 2006. This allowed the remaining states to establish partnership programs. It also added additional rules to limit the abuse of Medicaid for payment of long-term care services and supports by those who had considerable assets. However, the purchase of a partnership Long-Term Care policy provided the policyholder additional dollar-for-dollar asset protection. In the event, the policyholder exhausted their benefits they were able to access Medicaid benefits while sheltering an amount equal to the amount of benefits paid by the policy.