Protect Your 401k or IRA from NJ Medicaid

HNWMedicaid Eligibility and Asset Protection Planning

Protecting money from MedicaidUnder the federal regulations for Social Security Income (SSI) eligibility, the 401k’s of a spouse living with the applicant are specifically excluded resources.  See 20 C.F.R. § 416.1202(a)(1). Based on this provision, “an ownership interest in an IRA, 401(k), or other work-related pension plan for a non-institutionalized spouse, should be treated as excluded,” however, “many states reject this position.” While some states do not count the IRA of a non-applicant spouse in considering Medicaid eligibility, some states do.

The New Jersey Supreme Court has held that an IRA in the name of a community spouse is a countable resource when determining the Medicaid eligibility of an institutionalized spouse. This decision is based on the Medicare Catastrophic Coverage Act of 1988 (MCCA), which provides certain income and resource eligibility requirements designed to “protect married couples when one spouse enters a nursing home by ensuring that the spouse living in the community has ‘sufficient income and resources to live with independence and dignity.'”  Because the MCCA provides that it supersedes all other laws that are inconsistent with it, and it does not specifically exclude pensions or IRAs, the Court determined that “MCCA requires the inclusion of the community spouse’s IRA in the determination of the institutionalized spouse’s resources.” Id. at 197.

According to the American Council on Aging, New Jersey will count the 401k of a community spouse as a resource for Medicaid eligibility.  However, Delaware will exempt the applicant’s spouse’s retirement accounts, regardless of whether the account is in payout status. See Del. Div. of Soc. Servs., Del. Code tit. 16, § 20330.4 (“Defined Contribution Plans and Defined Benefit Plans are not considered countable resources when owned by an ineligible spouse. An ineligible spouse is a legally married husband or wife who is not eligible for Medicaid benefits.”).  So, maybe it’s time to move to Delaware.

To discuss your NJ Medicaid matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County, NJ Medicaid Attorney

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