Medicaid Redetermination – Part 6
Picking up where I left off in my blog post last week, George died leaving his wife, Mary who is on Medicaid which has a strict asset limit of $2000. While George was alive we had him change his will to leave Mary only the minimum amount required to satisfy New Jersey’s statutory elective share, however, as I explained last week there are often assets that pass outside the will automatically to the spouse. That’s what happened with Mary. Any assets received must be spent down in a month to preserve Medicaid. That’s not easy to do since there isn’t much that Mary needs. Alternatively, the money can be turned over to the State to then remain on Medicaid. The State will seek to be reimbursed under estate recovery rules when Mary dies anyway, so this can be a good option - provided Medicaid isn’t terminated before the family realizes the money received is a problem. George had other assets as well. He owned the marital home and he had some liquid assets as part of the community spouse resource allowance that he was entitled to keep. He additionally inherited money from his brother who died after Mary was already on Medicaid. Under Medicaid rules, his receipt of this inheritance
Medicaid Redeterminations – Part 5
In my post last week, I talked about what happens when the healthy spouse dies leaving a surviving spouse who is on Medicaid. The elective share requires that a minimum amount - 1/3 of the deceased spouse’s estate less what the surviving spouse already has - must go to the deceased spouse. With a Medicaid asset limit of $2000, anything received upon the first spouse’s death will cause complications and must be worked through. Let’s look at an example. George and Mary owned their home, other real estate that George and his siblings inherited from their parents and stock and bond investments. Before Mary applied and was approved for Medicaid, we had George purchase a Medicaid annuity to preserve some of the liquid assets that exceeded the community spouse resource allowance that George was permitted to keep under Medicaid rules. The residence was exempt under the primary home exception and the real estate was inaccessible and thus not countable because the other co-owners refused to sell. But that all changed once George died. As I explained last week, the augmented estate must be determined. We must first count the estate expenses such as funeral, estate administration and legal fees and other outstanding debts such as George’s unpaid medical expenses. There
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