Congress passed a law approximately 15 years ago that provides an incentive to acquire long-term care insurance. If a person obtains a long-term care insurance policy that satisfies this federal law, then assets can be protected from Medicaid and the cost of long-term care.
The applicable federal law is known as the Federal Deficit Reduction Act of 2005. A provision in this federal law allows individuals to protect assets if they acquire a long-term care insurance policy that satisfies the requirements of the Long-Term Care Partnership Program. New Jersey implemented a long-term care partnership program in accordance with this federal law. New Jersey’s regulations concerning this program went into effect on July 1, 2008.
According to the New Jersey Long-Term Care Partnership Program, individuals who purchase long-term care insurance policies that meet with the requirements set forth in the federal law can protect assets that equal the insurance benefits received under the policy. For example, if a person buys a long-term care insurance policy with a value of $300,000 then that individual can protect assets worth $300,000.
Federal law requires that the Commissioner of Banking and Insurance must certify that the long-term care insurance policy meets consumer protection requirements necessary for a policy to be qualified. For example, it must include an inflation protection based upon the individual’s age at the time the policy is issued.