Increase in Medicaid Divisor

As I have written about frequently in this blog, when applying for Medicaid an applicant must establish by documentary evidence that he or she did not transfer assets in the 5 year period directly before the requested start date for benefits.  Any  transfers made for which product or service of equal value is not received – what are called transfers for less than fair value – carry a Medicaid penalty or waiting period for benefits.

The more money transferred the longer the waiting period.  Another number, however, also affects the Medicaid penalty.  The Medicaid divisor is the number which a transfer is divided by to calculate the penalty.  The divisor is what the State deems to be the average cost of nursing home level care statewide as a daily rate.  A higher number results in a lower penalty.

Because the cost of care does continue to climb, each spring the number is adjusted and this year is no different.  Last month New Jersey announced the penalty has increased from $361.20 to $374.39.  On a monthly basis this equates to $11,387, meaning every $11,387 transfer for less than fair value results in a 1 month Medicaid penalty.  

With the rate of inflation up near 9% one would think that the divisor increase would have been greater than 3.6%.  Certainly the cost of nursing home care in Northern New Jersey is as high as $15,000 per month but that a larger increase was not approved.  This new number applies for any applications received on or after April 1, 2022 as well as for any pending cases that were filed before April 1, 2022