Changes to New Jersey Medicaid Coming November 1 (Maybe)
Last week I wrote about changes to New Jersey’s Medicaid program that are coming November 1, specifically with regard to the income cap. Well, as with all things Medicaid, that date is not certain. It’s now looking like December 1 is the more realistic date. What is certain, however, is that whenever the changes do become effective, New Jersey’s Medically Needy program will be terminated. Anyone currently in the Medically Needy program will remain unaffected by the changes but if they should come off of that program and then reapply, the new rules would apply to them. So, what are the changes exactly? Anyone with income that exceeds the $2163 per month income limit (in 2014) will be able to place their excess income into a qualified income trust, commonly known as a Miller trust, and become eligible for New Jersey’s Medicaid Only program. For the past 20 years or so, New Jersey has had in place its Medically Needy program which covers people who have income over the cap. For that reason, Miller trusts couldn’t be used. Not a problem for nursing home residents but a definite problem for home based and assisted living
Changes to New Jersey Medicaid Coming November 1
I have written for many years about Medicaid’s strict income limit or “cap” Individuals over the cap can’t qualify for some Medicaid programs, such as assisted living or home based Medicaid. That’s because New Jersey is what is known as an income cap state with a Medically Needy program. For those seeking Medicaid for nursing home care there is the Medicaid Only program. The income cap is $2163 per month for 2014 and is adjusted every year for inflation. The income we are concerned with is that which you receive as long as you live, no matter what. Social Security and pensions typically fall into this category, but not interest and dividends from investments. (That’s because assets must be at less than $2000 so interest is nonexistent.) If you are over the income cap by even $1 you can’t qualify for the Medicaid Only program. That hasn’t been a problem for nursing home residents because the Medically Needy program covers them if their income is too high. But, the Medically Needy program has never been available to residents in the community, such as those in an assisted living facility or receiving long
New Jersey Supreme Court Recognizes the Value of Special Needs Planning
Sometimes as elder and disability attorneys we are criticized for helping our clients qualify for, or in some cases maintain, government needs based benefits. “Why should people be able to protect any of their assets and still qualify for government benefits”, they ask. “That’s not who the benefits are intended for.” The New Jersey Supreme Court, however, in a recent decision recognized the value of what we do to help our clients. The case is Saccone v. Board of Trustees of the Police and Firemen’s Retirement System. Thomas Saccone, a recently retired firefighter has a severely disabled adult son, Anthony, who lives with him. Anthony has been deemed totally disabled by the Social Security Administration and for many years has been receiving SSI and Medicaid benefits, which are a lifeline for him. Both these programs are needs based, meaning that in order to qualify an applicant must meet strict income and asset guidelines. After Tom retired, he began receiving retirement benefits from the Police and Firemen’s Retirement System (PFRS). He also, with the assistance of his elder law attorney, executed a will that contained a special needs trust (SNT) for Anthony’s benefit. He ran into a problem, however, when
A $500,000 Estate Planning Mistake (Part 2)
Last week we were talking about Mary, who is losing out on a $500,000 401k her husband left to her in his will. So, why is the 401k custodian telling her she isn’t entitled to it? The reason is that the will does not automatically control how all property passes. It applies to what are called probate assets, those that pass by way of the will. Non-probate assets, such as retirement accounts and other assets which have beneficiaries designated upon death, are not governed by the will. That was Mary’s problem here. She asked me if I thought a lawsuit could force the 401k custodian to pay the account to her because the will clearly states John’s intent. She showed me the paragraph which makes reference to the 401k and his desire to leave it to Mary. I told her about a case I had years ago which was similar to hers. An attorney I knew filed a lawsuit to try to get a court to order the IRA custodian to pay a surviving spouse even though the beneficiary designation on file named someone else. Not surprisingly he lost the case because the beneficiary designation trumps the will. Retirement
A $500,000 Estate Planning Mistake
Mary called after her husband, John had died. She had questions about his will and his 401k. Mary was John’s second wife and he had two daughters from his first marriage. Between his first and second marriages, John had designated his daughters as the beneficiaries of his life insurance and 401k and had changed his will to leave everything to them as well. After they married, John changed his will to leave some of his assets, including his $500,000 401k, to Mary. The home he and Mary lived in, but which he owned, he left to his daughters, but provided Mary with the legal right to live there. The life insurance he didn’t change. His daughters remained the beneficiaries. So what was the problem? Mary was told by the 401k custodian that John never changed the beneficiary designation to her. As such, she was told, they must pay John’s daughters, not Mary, despite what the will says. Understandably, Mary didn’t like that answer. Next week I'll tell you why.
Can I Leave the House to my Children and not my Spouse? (Part 2)
Last week I was telling you about Sara, who called about her Mom. Dad left the house to Sara and her sisters but because of something called the elective share, I told Sara that the house may not be entirely protected when it is time to file for Medicaid benefits. Here’s how it works. The elective share is a law that protects an unsuspecting surviving spouse from being cut out of the will, only to find this out upon the predeceasing spouse’s death. In New Jersey, unless the surviving spouse knowingly waives this right, he/she is entitled to 1/3 of the deceased spouse’s estate less what he/she already has in his/her own estate. Let’s say, for example that husband dies leaving an estate of $600,000. 1/3 of his estate equates to $200,000. If wife already has $200,000 or more as part of her own assets, she doesn’t receive anything from his estate. If she has $100,000 then she receives another $100,000 from him. If she has nothing, then she receives $200,000. So, what has this anything to do with Medicaid? Because if the wife doesn’t assert her right to the elective share, Medicaid says, in effect, that she has