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Spouses’ New Jersey Medicaid Eligibility

The spousal impoverishment provisions of the Medicare Catastrophic Coverage Coverage Act of 1988 changed the requirements for eligibility for Medicaid when only one spouse needs to enter a nursing home and is expected to stay in the nursing home for at least 30 days. The law’s purpose is to preserve some of the assets of the other spouse (the “at-home” spouse). The at-home spouse is permitted to retain one-half of all “countable assets” subject to a minimum of $22,728 and a maximum of $113,640 (this is called the “Community Spouse Resource Allowance”).

The couples’ assets must be analyzed prior to applying for Medicaid. This includes all assets owned by the spouses jointly or individually. The first thing to assess is which assets are countable assets under the Medicaid laws and regulations. The following assets are exempt (not countable): the marital home, personal belongings and household goods, one car or truck, income producing real estate, burial plots and related items, irrevocable prepaid funeral contracts, the value of life insurance policies where the aggregate face value of the policies is less than $1,500 (if the aggregate face value of the policies exceeds $1,500, then the cash value of the policies is countable). All other assets are countable. Examples of countable assets are: cash, savings accounts, checking accounts, certificates of deposit, U.S. Savings Bonds, IRAs, 401(k)s, 403(b)s, nursing home accounts, prepaid funeral accounts which can be cancelled, some trusts, additional cars (in excess of one), other real estate, boats, recreational vehicles, stocks, bonds, mutual funds, and mortgages held on real estate sold. The at-home spouse may retain the exempt assets and one-half of the countable assets up to $113,640. The remainder of the assets must be spent until only $2,000.00 remains.

In addition to the assets held jointly and individually by either spouse, the Medicaid rules have created a 5 year “look back” period. Any assets which were transferred out of either spouse’s name for the five years prior to eligibility are subject to a penalty period. The penalty period is determined by taking the value of the assets transferred and dividing that number by $7,282 (the “Penalty Divisor”). The penalty period starts to run on the first day of the month in which the individual is otherwise eligible for Medicaid. For example, let’s say an individual is eligible for Medicaid on January 1, 2013, however in 2009 that person transferred their vacation home to their children and the vacation home was worth $300,000.00. The penalty period would be 41 months, (300,000 ÷ 7,282) and thus the individual would not be entitled to Medicaid until June 1, 2016. But, if the property had been transferred to the person’s children five years or more prior to eligibility there would be no penalty period.

Additionally, the income of the spouse who is entering the nursing home is paid to the provider directly for her care. However, that spouse is entitled to retain $35 per month for incidentals. The at-home spouse is permitted to retain their monthly income subject to the Minimum Monthly Maintenance Needs Allowance which allows the at-home spouse to retain monthly income ranging from $1,839 up to $2,841.

If you need assistance analyzing eligibility or applying for Medicaid, contact the attorneys at McLaughlin & Nardi, LLC, 37 Vreeland Avenue, Totowa, New Jersey, at (973) 890-0004, e-mail us or visit our website.