More on Oregon
The population in Oregon is graying and the State has instituted a plan to tackle the problem of the lack of Long Term Care Insurance coverage for its residents. The State has set up a “partnership” program between private industry and the State to encourage residents of Oregon to prepare for their future long-term care needs and buy a Long Term Care Insurance policy. 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 Oregon Long Term Care Qualified Partnership Program “is a new type of long-term care policy that lets you protect more of your assets (money in the bank, investments, a house) if you require long-term care, run out of money and need to apply for Medicaid. These policies have been sold in Oregon since January of 2008.”
A recent study 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 Oregon Long Term Care Qualified Partnership, residents of Oregon are able to purchase Long Term Care Insurance with a number of policy options that meet certain State-mandated criteria.
Oregon, 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:
“Even with a long-term care policy, some people eventually have to apply for Medicaid to help them pay for their care. Each dollar the policy pays for your care is a dollar that the state can’t later claim from your estate if you qualify for Medicaid. Generally, people qualify for Medicaid when they have assets of $2,000 or less. For example: Your long-term care partnership policy paid $50,000 for your care before you applied for Medicaid. You would get to keep both $2,000 and $50,000 and still be eligible for Medicaid. Medicaid would collect $50,000 less from your estate, if that amount is still in your estate when you die.”
Highlights and requirements of the Partnership Program include:Meet the requirements for being “tax qualified” as defined inSection 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 ensure that your protected in the future and that you are paid in “tomorrow’s dollars” and not at today’s rates which is impotent as the cost of long-term care services is set to rise substantially in the coming decades.