The Medicaid program is a health insurance program. It is jointly administered by the federal government along with the New Jersey state government. It is a program that is in place to provide health insurance for people who have very limited financial resources.
You may wonder why you would ever want to be able to qualify for Medicaid in New Jersey if you have resources and you are going to qualify for Medicare when you reach the age of 65. The reason why Medicaid is relevant is because it will pay for long-term care. Medicare does not pay for living assistance.
This is a very significant fact of life, because long-term care is very expensive. Genworth Financial has been compiling statistics on the state of long-term care costs for a number of years, and the numbers for 2015 are in.
We practice law in the state of New Jersey. According to the Genworth Financial survey, the median annual cost for a private room in a nursing home in our state is $127,700. The median cost for a semi-private room is over $116,000 per year. People often require care for multiple years, and 10 percent of nursing home residents stay in the facilities for at least five years.
If you have been taking good care of yourself throughout your life, you may be under the impression that you probably won’t need long-term care. The United States Department of Health and Human Services maintains a very informative website called LongTermCare.gov. According to the site, seven out of every 10 seniors will someday need help with their activities of daily living.
This 70 percent figure is rather attention-getting. In all likelihood, you will require living assistance eventually if you are fortunate enough to attain senior citizen status.
Qualifying for Medicaid
By now, you should be able to see why you may want to qualify for Medicaid at some point in time. It can be challenging to qualify for Medicaid, because there is a low limit on countable assets. For an individual, the limit is just $2000.
That’s the bad news, but the good news is that some things that you own are not considered to be countable assets for Medicaid purposes. Your home is not counted, but there is an equity limit. In New Jersey, the home equity limit is $828,000 in 2016, but there is no equity limit at all if a healthy spouse is remaining in the home.
One vehicle that is used as a primary source of transportation would not be counted. Heirloom jewelry, wedding rings, and engagement rings are not counted, and you could maintain ownership of your household belongings and your personal effects.
If a healthy spouse is remaining at home while his or her spouse enters a long-term care facility, the healthy spouse would be entitled to a Community Spouse Resource Allowance. This would be equal to half of the shared assets that are considered to be countable, but there is a a limit.
In New Jersey, the maximum Community Spouse Resource Allowance during the current calendar year is $119,220. There is also a minimum Community Spouse Resource Allowance that allows a healthy spouse to keep no less than $23,844, even if this is more than half of the shared countable assets.
Many people give gifts to their loved ones to divest themselves of countable assets before they apply for Medicaid to pay for long-term care. This can be done, but you have to be aware of the potential impact of the five-year look-back period.
You have to complete your gift giving at least five years before you submit your application if you want to obtain coverage immediately. A penalty is imposed, and your eligibility is delayed if you violate this five-year rule.
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Though it is a need-based program, it is possible to qualify for Medicaid coverage without losing a great deal in the process if you take the right steps in advance. The divestiture of assets through direct gift giving is a possibility when a Medicaid spend down strategy is implemented. However, another option exists.
To qualify for Medicaid in New Jersey, you could potentially convey assets into a Medicaid trust. This would be an irrevocable trust. The assets would not be counted if you attempt to qualify for Medicaid in New Jersey to pay for long-term care, but you could receive income from the earnings of the trust.
If you would like to obtain more detailed information about Medicaid planning and nursing home asset protection, we would be glad to help.To schedule a consultation, send us a message through our contact page or call us at (908) 222-8803.
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