New Jersey Announces Increase in Medicaid Penalty Divisor Effective April 1, 2023

by: Begley Law Group

By Marianne Johnson, Esquire., Begley Law Group

On March 28, 2023, the New Jersey Department of Human Services, Division of Medical Assistance and Health Services (DMAHS) announced an increase in the Medicaid penalty divisor from $374.39 to $384.57.

What does this mean?

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, 2023 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 39 days (15,000 ÷ 384.57 and rounded down).  This means that even though Mom was clinically and financially eligible as of June 1, 2023, Medicaid will not pay her nursing home costs until July 10, 2023.

For all applications received on or after April 1, 2023, the County Board of Social Services must use the new divisor of $384.57 when calculating a transfer penalty.  For cases pending on April 1, 2023, where the previous penalty divisor of $374.39 was used to calculate a penalty period, the penalty must be recalculated using the new daily divisor of $384.57.  Eligibility may not be established before April 1, 2023, when applying the new daily figure to the pending cases.  For example, if an application is pending but eligibility is established as of March 1, 2023, the County may not use the new penalty divisor.

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