New Jersey announces increase in Medicaid Penalty Divisor effective April 1, 2022

By Marianne Johnston, Esq.

On May 24, 2022, the New Jersey Department of Human Services, Division of Medical Assistance and Health Services (DMAHS) announced an increase in the Medicaid penalty divisor from $361.20 to $374.39.

Here’s what this means.

If an applicant for long-term care Medicaid benefits transfers assets within five-years of applying, a penalty will be imposed unless a limited exception applies.  The penalty is a length of time that Medicaid will not pay for benefits.  The number of days in a penalty period is calculated by dividing the value of the total amount of transferred assets by the amount of the penalty divisor and then rounding down.  The penalty does not begin to run until the date the applicant is determined to be otherwise eligible for benefits but for the penalty.

For example, if Mom applied for Medicaid to pay for her nursing home cost as of June 1, 2022 and was financially and clinically eligible as of that date but Mom gave her child $15,000.00 in the preceding five years, Medicaid would impose a penalty of 40 days (15,000 ÷ 374.39 and rounded down).  This means that even though Mom was clinically and financially eligible as of June 1, 2022, Medicaid will not pay her nursing home costs until July 11, 2022.

If you have questions about long-term care planning or Medicaid, contact Begley Law Group.