MEDICAID PLANNING IN NEW JERSEY: LEVELS OF LONG-TERM CARE, COST AND ELIGIBILITY
by: Begley Law Group
by Thomas D. Begley, Jr., Esquire, CELA
There are four frequently used levels of care in New Jersey. The cost of adult day care averages $70 to $120 per day, home care averages $28 per hour from an agency, assisted living averages $6,000 to $10,000 per month, and nursing homes cost $10,000 to $14,000 per month. Medicaid will pay for all four of these levels of care.
Citizenship and Residency
To be eligible, the applicant must be a resident of the United States who is either a citizen or an alien who can be classified as an eligible alien. The applicant must also be a resident of the State of New Jersey.
There is also a clinical eligibility test. Essentially, to be eligible for Medicaid an applicant must be unable to perform three of the six activities of daily living, which are transferring, bathing, dressing, feeding, toileting, and continence, or suffer from severe mental impairment.
There is an income test for Medicaid for all four levels. The income cap for Medicaid eligibility is $2,382 per month for 2021. All income that a Medicaid applicant receives is counted. This includes earned and unearned income. Income from the sale of a resource is excluded. The proceeds continue to be treated as a resource. Monies received as a settlement from a casualty insurance claim so long as the repair or replacement is made within 9 months is excluded. Third-party payments for medical care or services, including room and board, are excluded. Income received by the spouse of a Medicaid applicant is not counted. New Jersey follows the “name on the check” rule. This means that income belongs to the person whose name is on the check. If a check is payable to a particular individual, that individual is considered to be the owner of the income. If income exceeds the income cap, a Qualified Income Trust (“QIT”), also known as a Miller Trust, can be established to obtain eligibility.
For Medicaid eligibility purposes, income and assets are considered resources. The asset limit for Medicaid for all four levels of care is $2,000. If the applicant is an adult residing in the same household as his or her spouse, the resources of the ineligible spouse, also known as the community spouse, are deemed to the applicant in determining resource eligibility. A resource assessment is made at the beginning of the first continuous period of institutionalization or the date of the Medicaid application, whichever first occurs. For a married couple the Community Spouse may retain half of the couple’s countable assets with a minimum of $26,076 and a maximum of $130,380 in 2021. Certain resources are excludable. All resources are included, except a house occupied by an individual as his or her principal residence. One automobile is excluded, if it is used for transportation for the individual or a member of the individual’s household. Personal effects with a value not exceeding $2,000 are excluded. The cash surrender value of life insurance policies, if the total face value of the policies does not exceed $1,500 are excluded. The value of resources that are not accessible to an individual through no fault of his or her own, such as irrevocable trust funds, property in probate, real property that cannot be sold because of refusal of a co-owner to liquidate are not counted. Burial spaces intended for use for the individual, his or her spouse, or any other member of his or her immediate family are excluded.
Transfer of Assets
There is a Medicaid transfer of asset penalty for any transfers for less than fair market value made within five years prior to applying for Medicaid or receiving an institutional level of care, whichever comes first. An institutional level of care is a nursing home, an assisted living facility, or home care where the recipient meets the clinical eligibility test. The penalty for a transfer within the five-year lookback period is calculated by dividing the amount transferred by the average monthly nursing home cost, regardless of the level of care actually being received, which as of April 1, 2020 is $10,730.10 per month or $357.67 per day. As of the writing of this article, the amount of the divisor had not been increased.
Assets include all assets of the individual and the individual’s spouse. They also include assets to which the individual and the individual’s spouse are entitled, but do not receive because of inaction. Examples would include waiving a right of inheritance or not accepting or accessing a personal injury settlement. The transfer of a home would be considered an asset, even if the individual is residing in the home as a primary residence. Fair market value is an estimate of value based on generally available market information. Transfer of asset provisions apply to transfers made by the Medicaid applicant or the spouse of the Medicaid applicant. There are exceptions to the Medicaid transfer of asset penalty for transfers of assets to certain individuals. The home may be transferred without penalty to:
- The spouse of the Medicaid applicant;
- A child under age 21 or a child of any age who is blind or totally and permanently disabled;
- The brother or sister of an institutionalized individual who already has an equity interest in a home prior to the transfer, and who is residing in the home for a period of at least one year immediately before the individual becomes an institutionalized individual;
- The child of an institutionalized individual who is residing in the individual’s home for at least two years before the date the institutionalized individual became institutionalized, and who provided a level of care to such individual which permitted the individual to reside at home rather than in an institution or facility; or
- A trust established for the sole benefit of an individual under age 65 who is disabled.
Non-home assets may be transferred to:
- The spouse of the Medicaid applicant;
- A child who is blind or totally and permanently disabled;
- A trust established for the sole benefit of an individual under age 65 or to a child of any age who is disabled.
Hardship provisions exist but are extremely difficult to prove.