New Jersey Long Term Care Partnership Program

The population of New Jersey like America is growing older and the State has instituted a program to tackle the problem of the lack of Long Term Care Insurance coverage for its residents.  They have set up a “partnership” program between private industry and the State to encourage residents of New Jersey to prepare for their future long-term care needs.  Awareness of the need for Long Term Care Insurance remains low in New Jersey, as in the rest of the country.  Long Term Care Insurance covers the cost of services such as nursing homes, in-home care and assisted-living care when one is unable to care for themselves and is not covered by regular health insurance and only by Medicaid if one qualifies, which can be difficult without exhausting all of your assets.  The New Jersey Long Term Care Partnership allows “individuals who purchase long-term care insurance policies that meet certain requirements specified by the DRA (“Partnership Policies”) to apply for Medicaid under special rules for determining financial eligibility and estate recoveries.  These special rules generally allow the 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 Medicaid and will not subsequently be subject to Medicaid liens and recoveries.”

A recent study conducted by Genworth Financial found that 7 in 10 Americans have made no plans for long-term care and many were not even aware of this type of insurance and what it covers.  And, given that the Department of Health and Human Services estimates that 2/3 of all Americans will need long-term care at some point after they pass age 65, this does, indeed, constitute a problem to be reckoned with.  Many Americans, regardless of the State in which they live, are now at risk of having to exhaust their nest egg or rely on their children or other relative to care for them in retirement should they become unable to care for themselves.

Via the New Jersey Long Term Care Partnership, residents of New Jersey are able to purchase Long Term Care Insurance with a number of policy options that meet certain State-mandated criteria.  New Jersey, like many states, aims to reward those who do their part in solving this problem of Long Term Care Insurance coverage by planning ahead and protecting themselves and their assets.  Basically, it works like this: the Partnership program “enables people who purchase certain long-term care insurance policies to have more of their assets protected if they later need to have the state pay for their long-term care.  For example, if you receive $100,000 in benefits under your long-term care insurance, you may be allowed to protect an additional $100,000 in assets at the time you apply for Medicaid/Medical Assistance through a feature known as “Asset Disregard” under New Jersey’s Medicaid program.”

Highlights and requirements of the Partnership Program include:

• Meet the requirements for being “tax qualified” as defined in
Section 7702B(b) of the Internal Revenue Code
• Meet certain consumer protection requirements in 
Section 6021(a)(1)(B)(5)(A) of the Deficit Reduction Act, which are taken from the NAIC model act of 2000
• Provide inflation protection if the person is under age 76:
◦ For issue ages under 61: If a policy is sold to a person under the age of 61, it must provide compound annual inflation protection. Inflation protection must be continued until at least age 66 to be considered meaningful protection allowing the policy to maintain Partnership status.
◦ For issue ages 61 through 75: If a policy is sold to a person aged 61 through 75, the policy must provide some level of inflation protection. Inflation protection must continue for the first five consecutive years following the date of purchase, or until age 76, whichever occurs first, to be considered meaningful protection allowing the policy to maintain Partnership status. After the first five years, a policy sold to a person aged 61 through 75 may, but is not required to, provide inflation protection to maintain Partnership status.

The inflation protection provisions above are critical.  They insure that your protected in the future and that you are paid in “tomorrow’s dollars” and not at today’s rates which is important as the cost of long-term care services is set to rise substantially in the coming decades.

You can start planning today for your future long-term care needs and securing all that you’ve worked so hard to achieve for your retirement by purchasing a Long Term Care Insurance policy.  LTC Tree can assist you in finding a plan through the New Jersey Long Term Care Partnership Program that is right for you, no matter your age or financial status.  If you'd like to learn more about our affordable Long Term Care Insurance policies, simply fill out this form.  Thank you for reading today's blog.  We really appreciate it.