On Credit Cards and Medicaid – Part 2

In last week’s post I told you about two calls I received regarding Medicaid.  In each case the caller was concerned about how credit card charges on a Medicaid applicant’s card affects eligibility.

A common misconception about Medicaid is that debts affect eligibility.  Not true, at least in the sense that the State doesn’t care if you have debt.  You can’t simply offset your debt against your assets to get under the $2000 asset limit.  

What the State does care about is how you spend down your assets and that includes paying down debt.  For example, each time you make a payment to VISA, MasterCard or American Express to pay down or pay off your credit card bill you are spending down assets.  The question, however, is whose debt are you spending down on?

As I stated last week, New Jersey Medicaid is increasingly focusing on credit card statements if they see that an applicant is spending funds to pay those bills.  The State is scrutinizing the charges to determine if those charges are for products or services used by the applicant or by someone other than the applicant.

One of the callers told me that her mother’s credit card was used by other family members to make purchases.  She said she thought it was OK because her mother had paid down that debt.  It actually isn’t acceptable because she is paying for products and/or services charged to her card that were for someone else.  It would be no different than if she had given the money to that person who then made the purchase.  In each instance a Medicaid penalty results.

New Jersey focuses on credit card purchases because if penalties result that means Medicaid benefits delayed.  The larger the penalty the longer the wait for benefits.  This type of scrutiny is just another example of how qualifying for benefits has become so much more difficult, especially in the last couple of years since the onset of the Covid pandemic.