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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 up for that.  On a monthly basis the average cost now comes to $13,386 for care.

Be aware that this new number only applies to applications seeking benefits after April 1, 2024.  The old divisor will still be used for benefits sought before that date.