New Jersey Announces Increase in Medicaid Penalty Divisor Effective April 1, 2024

by: Begley Law Group

by Marianne Johnston, Esq.

A New Jersey estate planning lawyer helps families deal with many of the questions they have about the future.On March 26, 2024, the New Jersey Department of Human Services, Division of Medical Assistance and Health Services (DMAHS) announced an increase in the Medicaid penalty divisor from $384.57 to $440.10.

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, 2024 and was financially and clinically eligible as of that date but Mom gave her child $25,000.00 in the preceding five years, Medicaid would impose a penalty of 56 days 25,000 ÷ 440.10 and rounded down).  This means that even though Mom was clinically and financially eligible as of June 1, 2024, Medicaid will not pay her nursing home costs until July 27, 2024.

For all applications received on or after April 1, 2024, the County Board of Social Services must use the new divisor of $440.10 when calculating a transfer penalty.  For cases pending on April 1, 2023, where the previous penalty divisor of $384.57 was used to calculate a penalty period, the penalty must be recalculated using the new daily divisor of $440.10.  Eligibility may not be established before April 1, 2024,  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, 2024, 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.