Medicaid Redeterminations – Part 4
In this week’s 4th blog post on Medicaid’s annual redetermination process I address how the death of a spouse can create issues. In the case of a married couple where only one spouse has been approved for Medicaid, the non-Medicaid or “community spouse” is entitled to keep a home if residing in it and as much as $154,120 in other countable assets (sometimes more because of exceptions to the Medicaid rules). But, what happens if the healthy spouse dies first? As I have written in the past, one thing the community spouse should do is change his/her will so as not to leave everything to the surviving spouse who is now on Medicaid. These assets will certainly cause the surviving spouse to exceed Medicaid’s strict asset limit of $2000. But there also is a New Jersey law called the elective share that entitles the surviving spouse to a minimum of 1/3 of the deceased spouse’s estate. So it isn’t as simple as cutting the Medicaid spouse out entirely. Medicaid requires that the spouse assert his or her right to the elective share. Failure to do so results in a Medicaid penalty. A right by law not exercised is no different in the eyes of Medicaid than giving the money
Medicaid Redeterminations – Part 4
In this week’s blog post I continue my discussion on Medicaid’s annual redetermination process and the changes that can cause problems with achieving a renewal. In the case of a married couple where only one spouse has been approved for Medicaid, the non-Medicaid or “community spouse” is entitled to keep a home if residing in it and as much as $154,140 in other countable assets. But, what happens if the healthy spouse dies first? As I have written in the past, one thing the community spouse should do is change his/her will so as not to leave everything to the surviving spouse who is now on Medicaid. These assets will certainly cause the surviving spouse to exceed Medicaid’s strict asset limit of $2000. But there also is a New Jersey law called the elective share that entitles the surviving spouse to a minimum of 1/3 of the deceased spouse’s estate. Medicaid requires that the spouse assert his or her right to the elective share. Failure to do so results in a Medicaid penalty. A right by law not exercised is no different in the eyes of Medicaid than giving money away. Both are transfers for less than fair value. On the other hand, asserting the elective share is problematic because
Medicaid Redeterminations – Part 3
In this third post on Medicaid redeterminations, I explain changes that occur after Medicaid is approved that cause problems when it comes time for a Medicaid redetermination. One change is an expected or unexpected sum of money received by the Medicaid recipient. This could be because of an inheritance, personal injury settlement or the sale of a home that, while it was owned by the applicant during the application process did not prevent a Medicaid approval, but once the cash proceeds are received becomes a countable asset. If the Medicaid recipient is under age 65 then a 1st party special needs trust can be created and funds transferred there to preserve Medicaid. Alternatively, if the recipient has a child deemed disabled by Social Security or the State of New Jersey, funds can be transferred to that child or to a trust for the sole benefit of the disabled child. Again, Medicaid can be preserved. When neither of those options is available, then if the amount of money involved is small, it may just be easier to give the funds to the State and remain on Medicaid rather than terminate Medicaid, spend down the funds and reapply. After death, the State’s estate recovery process would require the payment to
Medicaid Redeterminations – Part 2
In last week’s post I began to discuss Medicaid redeterminations and how they have become more difficult than they once were. There are several reasons for this. 10 years ago New Jersey made changes to its Medicaid program that required certain applicants to utilize a qualified income trust. I’ve written about the QIT a number of times in this blog but to summarize, it becomes necessary to use one when an applicant’s income exceeds the strict income cap or limit on income. In 2024 the income cap is $2829 per month. When that occurs, a Medicaid application will not be approved unless the QIT is used. While there are specific rules that must be complied with, the State has imposed additional requirements and restrictions that were never intended. In some cases the State has misapplied the rules. For example, when the VA Aid and Attendance monthly benefit pushes the income over the income cap a QIT is not necessary, however, some counties are denying applications insisting on their use. We have found that on a redetermination the State is closely examining - or really re-examining the QIT. For example, many counties are requiring a full year’s worth of QIT bank statements and scrutinize them to determine if the
Medicaid Redeterminations – Part 1
When I explain how Medicaid works, I cover the income and asset limits in the case of a single applicant as well as a married one. I also talk about the 5 year Medicaid look back and the Medicaid penalty. People typically ask me about the qualified income trust and Medicaid estate recovery. Meeting all these requirements makes the Medicaid application process seem overwhelming to most - and I wouldn’t disagree. Once we get clients approved there is a sigh of relief - literally and figuratively. Mission accomplished. My final task as part of the application process is to explain how not to lose Medicaid. That’s because there is an annual redetermination process. Medicaid eligibility must be recertified each year. Years ago when I first started filing Medicaid applications, getting a redetermination notice was rare, however, now just about every county sends out annual redetermination applications each and every year. Even so, I would tell clients that the redetermination application process is much easier than the original application process and that most clients can handle these “redets” themselves rather than hiring us. Recently, however, I have noticed more scrutiny by a number of counties who are asking for more documents than they once did. I suspect that this is because the
2024 Medicaid Penalty Divisor
As I have written about frequently in this blog, many of the Medicaid numbers are updated annually. Most but not all are adjusted in lock step with Social Security’s cost of living adjustment (COLA). One Medicaid number that doesn’t adjust with Social Security is the Medicaid penalty divisor. That is the number by which any transfers for less than fair value are divided to calculate the penalty - or waiting period - for Medicaid benefits. This time period begins when a Medicaid application is filed and the applicant has proven that he/she has met all the other Medicaid requirements. In other words, Medicaid would be approved but for the transfer of assets. The more money transferred, the longer the penalty. The divisor is supposed to represent the average cost of nursing home level care in the state. Over time that number has increased as the cost of care continues to rise. This year’s increase is substantial at 14.4% New Jersey announced that effective April 1, 2024 its Medicaid divisor has increased from $384.57 to $440.10. Although the State does not explain its method of calculating the average cost of care, last year’s 2.7% bump was small compared to the 8.7% rate of inflation so perhaps this year’s increase is intended to make