The cost of a stay in a New Jersey nursing home can run anywhere between $125,000.00 and $150,000.00 per year. The primary payer for this is Medicaid. Medicaid, unlike Medicare is a welfare program, which covers the medical needs of New Jersey residents over 65, blind or disabled. The Medicaid program is jointly funded by both the federal and state governments. In New Jersey, the Medicaid Only program is administered at the state level by the Division of Medical Assistance and Health Services of the Department of Human Services. At the local level, the County Welfare Board administers the program.
In order to qualify for the Medicaid Only Program, certain income and resource tests must be met. With respect to the income test, all sources are considered. In order to be eligible for Medicaid Only, one’s gross monthly income can not exceed $2382. Certain items, however, are excluded, namely proceeds from the sale of a resource, certain insurance reimbursements, the value of social services, the value of food stamps, loans, and tax refunds. For those with income over the cap, Medically Need may apply.
With respect to the resource test, an applicant may retain only $2000.00 in “available” liquid assets. All assets are “available” except for those that are specifically excluded. A partial list of certain excluded assets include the following: home, automobile, wedding rings and engagement rings, life insurance if the total face value does not exceed $1500.00, or if the insurance is term insurance; burial spaces and burial funds; and certain types of annuities.
If the Medicaid applicant is married, a snapshot is taken of the couple’s countable assets as of the first day of the first month that the spouse was institutionalized. The resources of a couple are pooled together regardless of how the assets are titled. In order to protect the spouse who remains in the community, that person is entitled to a Community Spouse Resource Allowance (CSRA). For 2021, the CSRA is one half of the value of the combined assets with a ceiling of $130,380.00 and a floor of $26,076.00. In a further effort to prevent spousal impoverishment, the community spouse is also entitled to a Minimum Monthly Maintenance Needs Allowance (MMMNA), which is presently $2155.00 with a maximum of $3259.00 a month.
In order to spend down the resources to the $2000.00 level, the Medicaid applicant may have made certain transfers in the past. If the transfers were made and the applicant received fair market value in return, no transfer penalty exists. But if the transfers were made within 60 months prior to the time the applicant is both institutionalized and applies for Medicaid, and the Medicaid applicant received less than fair market value, then Medicaid will compute a penalty period. The penalty period, which starts only when the applicant is otherwise eligible, is imposed based on the uncompensated value of a non-excludable resource that was transferred, divided by the average private nursing home rate set by the State, presently $357.67 per day.
There are assets, however that may be transferred and no penalty period results, even though the transfer was made for less than fair market value. Assets may be transferred without penalty to the following persons: the community spouse prior to institutionalization, so long as the resource was not subsequently transferred; and a child who is blind and totally and permanently disabled.
With regard to the transfer of a principal residence, such transfer can be achieved without penalty so long as it was given to either: the community spouse; a child under 21; a blind or totally disabled child regardless of age; a sibling who already had an equity interest in the home prior to the transfer, and who was residing in the home for at least one year immediately prior to institutionalization; a son or daughter who lived in the home for a period of at least two years immediately prior to institutionalization, and who has provided care to the parent, which permitted the individual to reside at home rather than in an institution or facility. Such care must have exceeded normal personal support activities and must have been essential to the health and safety of the individual and consisted of such activities as supervision of medication, monitoring of nutritional status, and ensuring the safety of the individual. If none of the above lives in the home, the home may lose its exemption as the principal residence after the owner has been institutionalized for more then six months.
States are now mandated to recover from the estate of Medicaid recipients, all medical expenditures and outlays paid by Medicaid.New Jerseywill seek estate recovery from the estate of a deceased Medicaid recipient for all monies expended by the Medicaid program on behalf of the recipient. Without the proper planning, it is likely that your hard earned money will pass to the nursing home, not your family members. The concepts addressed above are by no means exhaustive in nature. The Medicaid laws are quite complex and are constantly under Federal, State and County review. Therefore, it is important that you choose a law firm that is both qualified and experienced in Medicaid Planning and Asset Protection.
Benjamin D. Eckman, Esq. concentrates his practice on Elder Law & Estate Planning. Elder law is intended to broadly assist “extended living”. An elder law practitioner provides the legal information necessary for persons whose lives will extend or have already extended beyond the time when all children are usually out of the house and when regular employment ceases. After the elder law attorney and client complete their work, legal documents have been drafted, tax considerations have been analyzed, and a plan to protect the elder’s estate has been implemented.
Benjamin D. Eckman’s practice focuses on Estate Planning & Elder Law – legal issues facing senior citizens. Benjamin D. Eckman received his Bachelor’s Degree in Business/Accounting from Touro College and his law degree from Seton Hall University School of Law. He is a member of the New York State Bar Association, the New Jersey State Bar Association, the National Academy of Elder Law Attorneys, the Elder Law Section and Real Property, Probate and Trust Section of the New Jersey State Bar Association, the Union County Bar Association, Passaic County Bar Association and the Bergen County Bar Association. He can be reached at (973) 709-0909, (908) 224-4357 or (201) 263-9161.