New Jersey Medicaid Crisis Planning

New Jersey Medicaid Planning

Sudden Changes and Big Decisions

Change is life’s only constant. Sometimes these changes strike without warning. If you or a loved one has experienced a sudden illness or serious accident, you understand how abruptly everything can change. Are you or a loved one suddenly in need of nursing home care? Finding and affording quality care on short notice can be stressful and draining. We can help you determine the best options for care and how to qualify for Medicaid to help finance them.

Long-term Care: Counting the Cost

Long-term care is expensive, and these costs only continue to increase as baby boomers age. Although the range varies depending on where you live, according to the Genworth Cost of Care Study, the national median annual cost of a private nursing home room is $108,405 with a 2.42% annual increase since 2020. With improved medical care, the average life span of adults also is increasing; this translates into more years of care at increasingly higher rates in the United States. Without some sort of financial assistance, these costs could be financially devastating. In fact, your entire life savings could be quickly depleted within a few years of needing long-term care. This is where Medicaid can help.

Medicaid is a joint federal and state program to assist those with low income and limited resources. While Medicare provides very limited long-term care coverage, Medicaid is much more extensive and provides essential health coverage to over 72.5 million Americans, including children, pregnant women, parents, seniors, and individuals with disabilities. However, because of its restrictions, qualifying for Medicaid can be extremely difficult, making Medicaid planning crucial for both the applicant and their caregivers. Without proper planning, paying for a nursing home could be all but impossible, causing stress and financial hardship for the entire family. Understanding Medicaid eligibility is essential for families to ensure their loved ones receive the care they need.

The Medicaid Application Maze

Although Medicaid requirements vary from state to state, they all share one common element: complexity. Each state specifies a maximum allowed income for individuals and couples in order to qualify for Medicaid. Also, the applicant’s total assets cannot exceed a specified amount called the Individual Resource Allowance, which is consistently very low, often as low as $2,000*. As part of the Medicaid application process, the Medicaid agency assists in calculating the amount of the Spousal Resource Allowance, also known as the Maximum Community Spouse Resource Allowance, which is currently set at $148,620. This figure is important to understand for couples going through the Medicaid application maze. If the applicant is married, the process becomes more complicated. For the recipient to qualify for Medicaid in any state, the applicant’s spouse can keep only half the couple’s assets up to the Maximum Community Spouse Resource Allowance. So, if a couple has the maximum $148,620** in assets, they must “spend down” to all but $3,000 (or whatever the state Individual Resource Allowance is) for the applicant and $74,310 for the spouse – on long-term care and medical expenses. This can be achieved by paying off credit card debt, paying off their mortgage, or purchasing medical equipment not covered by insurance, among other options. Understanding the complexities of asset protection and Medicaid spend-down is crucial for those navigating the Medicaid application maze.

What can you do if the value of your “non-exempt” assets exceeds the $148,620* Maximum Community Spouse Resource Allowance? If you give your extra assets away, which seems like an obvious choice, you will encounter greater problems. Violating this “Transfer Penalty Rule” could disqualify you from receiving Medicaid for months or years, depending on how much you gave away.

If your need for nursing home care is immediate, time is not something you can afford to lose. Why? If you wait too long and your non-exempt assets fall below the maximum $148,620 limit, then the applicant’s spouse can only keep half of what is left … with $29,724** as the Minimum Community Spouse Resource Allowance. In order to protect their assets and qualify for Medicaid, many couples turn to Medicaid Compliant Annuities, which involve paying a lump sum of money to an insurance company. This planning technique turns countable assets into non-countable income for the non-applicant/healthy spouse, allowing them to keep more of their assets. In other words, $74,310** truly is the Maximum Community Spouse Resource Allowance!

The Medicaid Qualification Process = Legally Protecting the Maximum Amount the Law Allows

This is only a brief and oversimplified review of a few Medicaid rules, of which there are many more. Navigating them on your own could be a nightmare at best and subject you to penalties at worst. Fortunately, though, our experienced professionals can guide you through the Medicaid maze as a public service. Our legal team can advise you throughout the application process, ensuring that you retain the maximum income and total assets allowed by law for medicaid applicants, while also helping you navigate the lengthy review process.

Conclusion

Seek appropriate counsel before you apply for and seek to qualify for Medicaid. We can give you – and your family – peace of mind during a difficult and uncertain time. When dealing with Medicaid, legal advice is something you cannot afford to go without.

* The Individual Resource Amount varies from state to state.

** Since these amounts (e.g., the “Community Spouse Resource Allowance,” etc.) are adjusted annually, these numbers may vary slightly depending on when the most recent figures are released.