Waive the Free-Look Period for MCAs in New Jersey

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Katie Camann
Katie Camann November 3, 2022

As Content Marketing Specialist, Katie drafts and edits content across multiple platforms, including blogs, Industry News, emails, videos, website pages, and more. She conducts research and gathers up-to-date information to keep our clients well-informed.

Disclaimer: With Medicaid, VA, and insurance regulations frequently changing, past blog posts may not be presently accurate or relevant. Please contact our office for information on current planning strategies, tips, and how-to's.

Based on a recent case out of New Jersey, Medicaid applicants can choose to waive the free-look period entirely when purchasing a Medicaid Compliant Annuity (MCA) from one of our exclusive carriers. This waiver gives agents and advisors some additional time with their crisis planning cases and provides their clients with a smoother path toward Medicaid eligibility.

What is the Free-Look Period?

According to the terms of the MCA contract and in compliance with state insurance laws, the contract owner has up to 30 days to examine and cancel the contract should it not meet their expectations. This cancellation period is often referred to as the policy’s free-look period. If the owner chooses to cancel the contract during the free-look period, they will receive a refund of their full premium amount. For Medicaid purposes, New Jersey, as well as a few other states, consider the MCA to be revocable and, therefore, not Medicaid-compliant during the free-look period.

Read More: How to Know When a Client is a Good Fit for an MCA

How to Waive the Free-Look Period in New Jersey

When purchasing an MCA from one of our exclusive insurance carriers in New Jersey, applicants can elect to use an Immediate Irrevocable Election Form to waive the free-look period entirely and qualify for benefits immediately. This specific form is only offered through our exclusive carrier and is approved by the New Jersey Department of Banking and Insurance.

You can take advantage of this special waiver by working with our team at The Krause Agency, and we can help you navigate the entire process, from filling out the waiver to submitting the MCA application.

What the Decision Means for New Jersey Advisors

This recent decision provides future Medicaid applicants the option to waive the cancellation period of an MCA in order to accelerate their eligibility for benefits without planning around the free-look period. By enforcing the policy’s immediate irrevocability as of the issue date due, the Department of Human Services has set the standard for how an applicant’s eligibility effective date should be calculated.

Needless to say, this is a big win for advisors and their crisis planning clients in New Jersey! Waiving the free-look period for MCAs provides you and your clients:

  • Additional time to purchase an MCA before month’s end
  • Confidence that the contract will be received in time
  • A smoother path toward Medicaid eligibility

If you have questions about how this decision impacts your business or how to navigate the free-look requirements in your state, contact our office today!