Potential Impact of Medicaid Cuts (Part 1)
With so many significant changes being proposed, some which have already occurred in the first months of the new Congress and presidential administration, a question I am increasingly being asked by clients and prospects who are or may in the future apply for Medicaid is, “will there even be Medicaid when I need it?” It is impossible to answer this question with any certainty since we are living in very uncertain times. Nevertheless, there is a certain level of misunderstanding about what is being considered by Washington and what is not. It is these misconceptions that I can address. As I always explain, Medicaid is not one single “monolithic” program. It is a series of different programs under what I call a “Medicaid umbrella”. Additionally, while Medicaid was created by federal law, it is administered on the state level. The federal government assigns a sum of money to each state. Each state also funds these programs with its own money. So, in order to understand the impact of any proposed changes and cuts, we need to examine which Medicaid programs may be affected and how the state that you reside in funds its programs.
2025 Medicaid Penalty Divisor
As I have written about frequently in this blog, many of Medicaid’s numbers are updated annually. Most but not all are adjusted in lock step with Social Security’s cost of living adjustment (COLA), which is affected by the rate of inflation. 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 so it should somewhat correlate to the rate of inflation. I cannot recall any year in which the cost of care actually decreased. Yet, last month New Jersey announced the new divisor effective 4/1/2025 which has actually decreased by 8.5% from last year. Effective April 1, 2025 the Medicaid divisor has decreased from
Transferring a Motor Vehicle After Owner’s Death (Part 2)
In my blog post last week I began to answer a very common question, “How do I transfer title to a motor vehicle of a deceased owner?” If the vehicle is part of the probate estate, then either Letters Testamentary (if there is a will) or Letters of Administration (when there isn’t a will) are necessary before an appointed representative can transfer title. There are, however, ways to dispose of a vehicle without the need to file anything with the Surrogate or probate court. In order for this scenario to be possible, the title owner must set things up a certain way while still alive. Title to a motor vehicle may be held as co-owners by spouses or domestic partners. In that case, when one owner dies the surviving owner must complete an affidavit which can be found on the NJ motor vehicle website and bring it to DMV with the title and certified copy of the death certificate to have new title issued in the sole surviving owner’s name. Alternatively, title can be designated as payable on death to a named beneficiary but, again, this must be established while the owner is alive. A transfer on death form that can be found on the state
Transferring a Motor Vehicle After Owner’s Death (Part 1)
It’s a question that comes up often and early when discussing how to administer estates after someone dies. In part it is because of the difficulties many of us have had at times figuring out New Jersey’s Motor Vehicle Services process. The question is “How exactly do I dispose of a motor vehicle when the owner dies? The first step is to locate the title to the vehicle. Without it you can’t transfer title at all. If you can’t find the title then you’ll need to get replacement title from NJMVS. But that requires the Owner - who is deceased - to request it. So, what to do? If only the deceased owner’s name is listed on the title then the vehicle is part of the probate estate. In order to obtain replacement title and then transfer title some paperwork will need to be filed with the Surrogate first. The exact procedure depends on whether there is a Last Will or not and the size of the estate. If there is a will, the executor named in it must present the document to the Surrogate of the county where the person lived at the time of their death. With the surrogate certificate showing the appointment, the executor can then sign over title
How Do I Access a Deceased Owner’s Account? Part 5
In the past 4 blog posts, I have been discussing how to access a deceased owner’s bank or brokerage account. In part it depends on whether the account is a probate asset - controlled by a will or state intestacy laws when there is no will - or a non-probate asset. But after that determination is made there is still a hurdle to clear because of the State’s automatic lien after death. By law the State has a lien on all accounts in New Jersey banks and financial institutions and on stock in New Jersey companies to insure it will receive the inheritance tax it is owed. The lien is released by obtaining a tax waiver which the State issues when it is satisfied that the correct amount of tax has been paid. Until then (the tax is due 8 months after death and if unpaid accrues interest at 10% per year) 50% of the account may be withdrawn according to something called a blanket waiver. Withdrawing the rest must wait until the tax waiver process is completed. When there is no inheritance tax due, the State does have an abbreviated process to the obtain the waiver without the need to file an inheritance tax return. A self
How Do I Access a Deceased Owner’s Account? Part 4
How Do I Access a Deceased Owner’s Account? Part 3 In last week’s blog post, I explained the process of accessing a deceased owner’s account both when there is a Will and when there is not. But as I said last week, once that is accomplished the financial institution may still not release all the funds without one additional step. That is because of something called a tax waiver which relates to the payment of New Jersey’s inheritance tax. I’ve written about the tax waiver in past posts but I will summarize here again. While New Jersey eliminated its estate tax back in 2018 it still has an inheritance tax which is based on the relationship of the heirs to the person who died. Children, grandchildren and spouse are exempt from the tax but other more distant relatives and non-relatives are subject to the tax. Although there are certain assets that are exempt from inheritance tax, such as life insurance payable to a named beneficiary (even if that beneficiary is in a category which would otherwise cause there to be inheritance tax), contrary to common belief the tax is not limited to assets that pass by way of the will - what are called probate assets. Assets