Medicaid Planning

Medicaid planning is an important are for New Jersey senior citizens.  Our elder care lawyers assist people from all walks of life to plan for their futures by addressing Medicaid’s complex problems.

Medicaid planning is important and complex.  Our estate planning and elder law attorneys can help you navigate through this difficult but vital area.
The goad of Medicaid is to provide medical care for those who cannot afford it.  Medicaid was established to help each state provide medical assistance for aged, blind, or disabled persons and families with dependent children who do not have the income or resources to meet the cost of necessary medical services. Although the source of the funds is federal, the program is administered by the states, which must comply with Medicaid statutes and federal regulations. New Jersey elected to participate in Medicaid when it passed the “New Jersey Medical Assistance and Health Services Act.”  

Our estate and elder care attorneys assist people with Medicaid eligibility. Advanced planning for Medicaid eligibility provides an opportunity not only to potentially protect assets accumulated over a lifetime, but also to review a person’s priorities in her later years.  Medicaid can pay for nursing home care when needed by someone who meets Medicaid’s strict eligibility requirements.  First and foremost, a person may not own “countable” assets valued in excess of either: $4,000.00, if her gross monthly income is no greater than $903.00; or $2,000.00 if his gross monthly income is between $903.01 and $2,022.00.  Of course, the key to eligibility is what is considered to be a “countable asset.”

Most assets are considered “countable.”  These include accounts held at banks and other financial institutions; real estate other than the principal residence; stocks and bonds; and the cash surrender value of most life insurance policies.  Assets which can be excluded include real estate which is the principal residence of a spouse or other dependent relative, prepaid funeral plans, one car – provided it is worth $4,500.00 or less, one wedding ring, and one engagement ring.  

When a married person enters a nursing home, their spouse is called the "community spouse" under Medicaid rules.  The community spouse is permitted to retain some of the assets held jointly with the spouse who has entered a nursing home.  The assets allowed to be retained by the community spouse is limited to one half of the value of the countable assets held jointly by the couple up to $115,920.00 (for 2013).  This figure is indexed for inflation and thus is subject to change each year.   The amount the community spouse is permitted to retain is called the "community spouse resource allowance.”  While the ceiling for the community spouse resource allowance is $115,920.00, the floor for 2013 is $23,184.00.  The state must allow a community spouse to keep $23,184 even if that is more than half of the value of the couple’s jointly held countable assets.

Transfer of property is heavily requested and closely scrutinized in Medicaid applications. Therefore, our estate planning and elder care attorneys work with New Jersey residents to plan their asset transfers now so that in the future their Medicaid eligibility is maintained.   

Medicaid requires financial documentation going back five years (the “look-back period”).  To qualify you cannot have transferred assets during the look-back period.  You cannot move into a qualified facility in January, transfer your assets to another person in February, and then qualify for Medicaid in March.  To prevent this from happening, Medicaid imposes a severe penalty for assets transferred during the look-back period for less than fair market value.  Proper advanced planning can ensure that you are not penalized.

There are however certain asset transfer which are exempt and allowable within the five year look-back period.  Certain individuals are allowed to receive asset transfers from a Medicaid applicant, including spouses, blind or disabled children, trusts for the benefit of blind or disabled children, and trusts for the benefit of a disabled adult under the age of 65. 

There are also exceptions for the transfer of a home. A Medicaid applicant may transfer her home to the following recipients without triggering a penalty: her spouse, a child under 21 years old, a blind or disabled child, a trust for the benefit of a disabled person under 65 years old, a sibling who resided in her home during the prior year and already has an ownership interest in the home, and her child provided the child has lived in the home and at least two years and provided care allowing the Medicaid applicant to avoid having to entering a nursing home.

Contact our elder care and estate planning attorneys by e-mail or telephone (973) 890-0004.