New Jersey plans to implement Long-Term Care Insurance Partnership Program on July 1, 2008

The Deficit Reduction Act of 2005 (“DRA”) authorized the expansion of the Long Term Care Insurance Partnership Program into the various states. New Jersey’s Long Term Care insurance Partnership Program was approved by the Center for Medicare and Medicaid Services (“CMS”) on February 12, 2008 and will become effective on July 1, 2008. Under this program, individuals who purchase long-term care insurance policies that meet DRA requirements can qualify for Medicaid under special rules which allow the individuals to protect assets equal to the insurance benefits received from the DRA-compliant long-term care insurance policies. The protected assets will not be taken into account in determining financial eligibility for Medicaid and will not subsequently be subject to Medicaid liens and recovery efforts by the state. In other words, the DRA-compliant policies allow a dollar for dollar credit for the maximum insurance payout which protects those assets from medical spendown.

For example, if an individual buys a 5 year, $200/day DRA-compliant long-term care insurance policy, the maximum benefit payable is $365,000. That maximum benefit amount under the policy becomes the amount of assets which are protected if the individual later applies for Medicaid. In addition, the individual is entitled to the usual Medicaid exemptions, such as the Community Spouse Resource Allowance, which is $104,400 in 2008. There are conditions on the type of policy (must be the 5% inflation rider, etc) but it sounds like, finally, there is an incentive to purchase long-term care insurance which really means something.

The NJ Department of Banking and Insurance recently issued Bulletin No. 08-05, describing the Long Term Care Insurance Partnership Program Producer Training Requirements, which is attached here – Bulletin-No-08-05-issued-by-the-Dept-of-Banking-and-Insurance.pdf.