HNWElder Law, Medicaid Eligibility and Asset Protection Planning

Although the Deficit Reduction Act of 2005 tightens Medicaid eligibility in New Jersey, Medicaid continues to be the primary program to avoid impoverishment due to long-term care costs.  New Jersey Medicaid can fund long-term care in a nursing home, assisted-living facility or private residence.

Because Medicaid eligibility rules often are replete with traps, Medicaid planning should be attempted only with expert guidance.  For example, filing a Medicaid application too early can trigger expensive penalties that wouldn’t arise if the application were timed properly.

To qualify for Medicaid long term care, you must demonstrate medical eligibility and have minimal resources and income.   Resource and income limits vary depending on living arrangements and care needs.  For instance, vacation homes, gifts, Social Security and security deposits always are countable.

When one spouse applies for Medicaid to fund long-term care, the resources, savings and assets of both spouses are counted against eligibility. However, there are some exemptions for the community spouse. Spousal allowances are modest and a community spouse will face a grim financial future without effective Medicaid planning.

Early planning can generate the greatest savings, but it’s never too late – even if a loved one already has entered a facility.  Planning can help maximize the community spouse’s assets and income, convert resources into exempt income, and minimize gift penalties.  These strategies may be employed individually or jointly.

Maximize Allowance

To qualify for the maximum allowance, couples worth under $220,000 can often use properly timed loans and other techniques.

Medicaid applicants must apply their income toward long-term care costs.  Because couples often rely on both spouses’ income to meet normal living expenses, a community spouse can suffer severe hardship if he or she loses access to her spouse’s pension and Social Security.  Fortunately, in many cases, couples can restructure finances and housing costs to dramatically increase the community spouses’ income allowance.

Once an individual qualifies for Medicaid, only the modest Medicaid resource limits will be available to supplement the basic needs Medicaid covers.  Therefore, it makes sense for families to buy items they will need with resources the family must spend down to qualify for Medicaid.  Rather than spend the community spouse’s resource allowance on clothes, the community spouse can purchase clothes with excess resources that she and her husband must spend down to qualify him or her for Medicaid.  Typical spend-downs include household goods, services, acquisition or improvements to the home and vehicle for the community spouse, travel and Medicaid-qualified prepaid funeral accounts.

If you have any questions with regard to New Jersey Medicaid planning and eligibility, contact Fredrick P. Niemann, Esq.  an experienced New Jersey Medicaid planning attorney toll-free at 888 800-7442 or e-mail him at today.

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