Long Term Care planning can be an important part of estate planning. While some people have the forethought and ability to secure long term care insurance or unitize other planning strategies to pay for institutionalized care, others will be left to use their life savings to privately pay for these services until or unless they run out of money and/or meet the medical and financial criteria for Medicaid Eligibility.
What is Medicaid?
Medicaid is a State and Federal jointly funded insurance program that provides health coverage to individuals meeting low income requirements. While Medicaid is available to persons of all ages who meet the requisite criteria, this page will address Medicaid eligibility for New Jersey residents who are over the age of 65. In New Jersey, the Medicaid program is called New Jersey Family Care and those individuals who meet the criteria for eligibility will be entitled to benefits. There are several Medicaid programs that offer personal care assistance, adult day care, home and community based services and institutional or nursing home care.
What are the Financial Requirements for Medicaid Eligibility?
Rates can change on an annual basis. This year, 2022, the financial limits for a single Medicaid applicant over the age of 65 is income not greater than $2523.00 per month and assets no more than $2000.00. Married couples where both spouses are making application will result in an income cap of $5046.00 and asset cap of $3000.00. Married couples where only one spouse is making application caps income for the applicant at $2523.00, and assets for the applicant $2000.00, with an asset cap for the well spouse at $137,400.00. All of a Medicaid beneficiary's income, but for a personal needs allowance of $50.00 per month, medicare premiums, and potentially an income allowance for the well spouse, must go towards nursing home costs.
There is strict construction on what does and does not constitute income and what assets are countable or exempt for the purpose of determining Medicaid Eligibility. Further, even if an asset is exempt from being counted, it may still be subject to Medicaid's estate recovery program. That is after the Medicaid Beneficiary has died, the New Jersey's Medicaid agency will seek reimbursement of the costs of care through the Estate of the Medicaid Beneficiary. Without proper planning, the home that was an exempt countable asset will be used to reimburse Medicaid.
Medicaid has a five (5) year look back period. Assets that are gifted or transferred for less than fair market value during the that look back period will be counted and result in a period of ineligibility. The 2022 penalty period in New Jersey is equal to $374.39 per day. Therefore, even if, at the time of application, the Applicant has only $2000.00 in assets, if assets were gifted or discounted in sale during that five years prior, a period of ineligibility will follow equal to the result of the amount in question divided by the per diem penalty divisor. For example, if $10,000.00 was gifted during the look back period, it would result in an estimated 27 days period of ineligibility.
Protecting Your Home and Life Savings
According to Krause Financial Services, the average cost for nursing home care in New Jersey is $11,254.00. Many times, an individual may have too much income to qualify for Medicaid, but not enough to privately pay. Even when there are sufficient assets, paying for nursing home care out of pocket can quickly eliminate savings that took a lifetime to accumulate. Whether you are interested in learning about strategies to proactively plan or you require immediate crisis planning, contact Hartmann Law to determine what options may be available to protect your loved ones and what you have worked a life time to secure.
Contact Hartmann Law
Contact Hartmann Law to learn more about Medicaid Asset Protection Planning. Take steps to start your Life and Legacy planning today! Take action to ensure you voice is heard when you are unable to speak for yourself. Make the decision to protect yourself, your loved ones, your business, your property by design and not by default!
Schedule a call today with Hartmann Law, providing Life and Legacy plans ready for today with an eye on the future.