What is Medicaid in New Jersey?
Medicaid is a joint Federal and State program that will pay for an individual's Long Term Care costs. The Medicaid program will pay for a person’s long‑term care costs in a nursing home, assisted living or even at home care if he/she qualifies. Medicaid is administered by a New Jersey agency called the Department of Human Services.
Medicare is the government benefit program that covers medical expenses such as hospital bills and doctors’ fees for seniors who are at least 65 years old. Medicare is not a means-tested program. If a person is disabled or over 65 then regardless of how much money that person has he or she can still qualify for Medicare benefits. Medicaid is the government benefit program that can cover nursing home, assisted living or at-home care costs. However, Medicaid is a strict means-based and asset-based program. Any person who is applying for Medicaid must complete an application, and also pass asset and income requirements established by Medicaid.
It is extremely important to obtain qualified legal advice if you or your parents are applying for Medicaid or at best, prior to applying for Medicaid. The cost to pay for nursing homes or assisted living is rising at an astronomical rate. The bottom line is that most people simply can’t afford to pay for nursing homes. Many people are forced to wipe out their entire life savings in only a year or so to pay for nursing home care. Thankfully, the New Jersey Medicaid Program exists to help out the middle class. Basically, Medicaid is the long term care insurance for the middle class. However, There are many complicated requirements that must be satisfied before a person will become eligible for Medicaid. To qualify for Medicaid an applicant is required to pass certain tests on the amount of income and assets you have. The main legal concept of Medicaid is that the applicant must use the bulk of his own assets to pay for a nursing home before Medicaid will begin paying. Therefore, it is very important to undertake careful Medicaid planning to try to save as much of your family’s savings as possible. Moreover, the Medicaid rules are a maze of confusion and consist of endless legalities, in most instances an experienced lawyer will be able to save your family most of their savings and eliminate the aggravation by providing you with legal counseling on Medicaid planning. In summary, legal advice of an attorney that specializes in New Jersey Medicaid planning will allow you to:
- Preserve as much of your family's savings and assets as possible
- qualify faster
- lessen the chance of a penalty
- eliminate the high cost of nursing home or assisted living care
Absolutely. If you are is headed for the nursing home then you must have your estate plan carefully reviewed. Some important areas to review are as follows:
a. Review Your Will- a person in the nursing home should not inherit anything if they are receiving Medicaid benefits, it may disqualify them.
b. Make Sure that Your Power of Attorney is Updated
c. Make Certain that you have a Living Will [see our blog post for more about Living Wills]
The cost to live in a nursing home is outrageous! The cold hard reality is that the relatives of the person who has to go into the nursing home become furious sometimes at the prospect of seeing their inheritance, or if your spouse is going to the nursing home, your hard earned savings wiped out to pay for the nursing home.
There are basically four ways that you can pay the cost of a nursing home;
a. Long Term Care Insurance: However, the premiums for long term care insurance very high and many people can’t afford it or even qualify and the policy will only cover a portion of the costs.
b. Payment With Own Money/Funds: Most middle class Americans have to use their own money and funds to pay for a loved one’s nursing home. Basically, most middle class people have to pay for their own long term care. Unfortunately, the cost to pay for a nursing home can quickly wipe out many middle class families’ savings. Most nursing home bills average between $10,000 to $12,000 per month in our area. Therefore, many families in New Jersey quickly wipe out their savings by paying for a loved one's nursing home bills.
Some common examples of countable Medicaid assets are as follows;
a. Cash, savings, and checking accounts, credit union shares and draft accounts.
b. Certificates of Deposit
c. U.S. Savings Bonds
d. Individual Retirement Accounts (IRA), Keogh plans (401K, 403B)
e. Nursing home accounts.
f. Prepaid funeral contracts which can be cancelled.
g. Trusts (depending on the terms of the trust).
h. Real estate (other than the residence).
i. More than one car.
j. Boats or recreational vehicles.
k. Stocks, bonds or mutual funds.
l. Land contracts or mortgages held on real estate sold.
A very frequent issue that arises is when the parents share their bank accounts with their children. Thus, the legal issue that arises is how Medicaid classifies joint bank accounts when the children’s names are also listed on their parents bank accounts. Unfortunately, Medicaid will consider any joint bank account as a countable asset. Therefore, the entire bank account if it is jointly titled is also counted towards the applicants total resources.
Basically, Medicaid will “look back” into the applicants total financial past for the five year period prior to the date when the person is institutionalized, or the date of the Medicaid application. They do this to determine if the applicant has given away money or assets for the purpose of qualifying for Medicaid benefits.
a. thinking that Medicaid is only for the poor people.
This is a major myth. Medicaid is essentially a long term care insurance program for the middle class. Medicaid now pays for 70% of the long‑term care expenses for the middle class.
b. Having the belief that it is too late to undertake any Medicaid planning.
c. Gifting away your assets too early.
d. Gifting away your assets too late.
e. Overlooking the “safe harbors” or loopholes in the Medicaid planning system.
f. Not requesting an increase of the Medicaid resource or income allowance.
g. Applying for Medicaid too early or too late.
h. You should not “wing it” and attempt it on your own?
There is no doubt that the Medicaid laws are a complex maze of confusion, contact us today for expert Medicaid planning and Elder Law in New Jersey