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East Hanover New Jersey Elder Law Blog

Can my estate be subject to Medicaid recovery in New Jersey?

Many people in New Jersey rely on Medicaid benefits to pay for their care needs as they age. However, what they may not know is that upon their death, Uncle Sam may come knocking, seeking recovery from the deceased's estate of what was paid for using Medicaid benefits.

In general, under both federal law and New Jersey law, once a Medicaid recipient passes away, the state will recover the funds from the deceased's estate for all payments that were made using the Medicaid program once the recipient reached age 55. For Medicaid recovery purposes, the deceased's home, bank accounts, trusts and annuities, stocks and bonds and other tangible pieces of property constitute the deceased's estate, even if these assets have been passed on to the deceased's survivors.

The basics of elder care planning

As people age, things tend to get more difficult. Everyday tasks, such as walking, writing and using the toilet, may seem impossible for the aging.

Planning is an integral part of any financial forecast, and elder care planning should start taking front and center, especially if your family has a history of degenerative diseases that require constant care and support.

An overview of Medicaid expansion in New Jersey

Many aged individuals in New Jersey plan on utilizing Medicaid benefits to pay for their long-term care needs. However, it is important to understand how Medicaid has changed over the years. Eligibility hinges on a person's income level, but with Medicaid expansion, more people have been able to apply for and receive benefits.

Through the Affordable Care Act, New Jersey was able to extend its Medicaid program in 2014 by using federal funds. In fact, from autumn 2013 through November 2017, the number of people enrolled in Medicaid in New Jersey reached almost 460,000 -- a 36% increase. This means that the number of people without health insurance dropped to 8% in 2016.

Nursing homes may not be an option for many by 2029, study says

Some people in New Jersey may plan on relying on savings, home equity or Medicaid resources to pay for a stay in a nursing home in their old age. However, according to recent research, if the cost of senior housing continues to rise at its current trajectory, by 2029 almost 8 million middle-income seniors will not be able to afford an assisted living facility or nursing home. If this happens, it may become more common for seniors to receive in-home care.

The study looked at seniors between 75 and 85 whose financial resources ranged from $25,001 to $74,208, and those age 85 and older whose financial resources ranged from $24,450 to $95,051. The study found that these individuals would not be able to afford senior housing in 2029 but would also not be eligible for Medicaid benefits.

Tips for executing a nursing home contract in New Jersey

When a person in New Jersey decides to put a loved one in a nursing home, they will have to execute a contract with the facility. It is important that people understand what to include and what not to include in such contracts. This is for the benefit of their loved one, who will be under the care of the nursing home staff. The following suggestions of what to include in a nursing home contract may be helpful to readers, but ultimately readers should seek legal guidance before signing a nursing home contract.

First, the contract should be unambiguous as to what services the nursing home includes as part of its basic daily rate. If there are services not included in the basic rate, the contract should note what it will charge for such services. If the resident plans on using Medicaid to pay for their nursing home stay, the contract should include language giving them the right to apply for Medicaid as well as the ability to appeal a denial of benefits. The facility's "bedhold policy" should meet any requirements set out through Medicaid.

Medicaid planning and the five-year 'look-back' period

While some people in New Jersey may have long-term care insurance or a significant amount of savings to pay for nursing home care, many people plan on using Medicaid benefits. A person may qualify for Medicaid benefits if their monthly income does not exceed a certain amount that is set by the federal government (although some states have even lower limits).

However, not all assets count as income for Medicaid purposes. For example, savings for funeral costs will not be included when calculating income. Some assets, such as those placed in an irrevocable trust, are no longer accessible and will not count as income. If a person's home is their principle residence and they have the intention of returning there after their nursing home stay, it will not be included when calculating income. There are other Medicaid planning and asset protection strategies that may be utilized as well.

The difference between guardianships and conservatorships

Chances are, your parents have always been able to make their own decisions when it comes to their medical care, finances and so on. In some cases, though, these loved ones can suffer injuries or develop illnesses that make them incapable of doing so any longer.

When faced with such circumstances, you may have a need to establish either a conservatorship or a guardianship, depending on the specifics of your loved one’s condition or situation. In some cases, you may need to establish both, and you may elect to have two different people take on these roles, or you may have one person assume the roles of both guardian and conservator.

How can you protect your special needs child in your estate plan?

Parents of special needs children in New Jersey are often grateful for every moment they have with their child. However, they may understand that their child will need life-long care, and, thus, may be worried about what will happen to their child once they are no longer alive. This is where estate planning becomes very important.

One option that may be considered if parents believe it is likely their child would be eligible for government benefits once they reach age 18 is to execute a special needs trust. The funds in a special needs trust are meant to supplement the benefits the child receives from the government, such as Medicaid and Supplemental Security Income, while ensuring that the child's income and resources won't be so high as to make the child ineligible for these benefits. For example, government benefits could be used to pay for the child's housing, food and health care, but the funds in a special needs trust could be used for other enrichments, such as entertainment expenses.

Adult children can provide care to aging parents in New Jersey

Many people in New Jersey find themselves having to care for their aging parents, even if they are still working themselves. It can be difficult to find a work-life balance when you are a caregiver. However, there are legal options that may help people care for aging loved ones, even if they have not yet left the workforce.

First, there is the federal Family and Medical Leave Act. This act permits a worker to take up to 12 weeks of unpaid leave each year to care for an immediate family member who is suffering from a serious health condition, while still retaining their job and health insurance. Moreover, New Jersey, along with several other states, offer paid family leave as well. However, it is important to note that not all employers are subject to the FMLA, and employees wishing to take leave under FMLA must meet certain eligibility requirements.

Pew Research conducts poll on paying for long-term care

Many people in New Jersey rely on Medicaid to pay for their long-term care needs. However, not everyone is optimistic that government benefits will be available in the future. Pew Research polled 2,524 people regarding who should be paying for long-term care 30 years from now and who they think will actually be paying. The results indicate that, while many think the government should shoulder the bill, they do not anticipate this happening any time soon.

Of those polled, 55 percent reported that the government should be primarily responsible for paying for Americans' long-term care needs. In contrast, 28 percent of those polled reported that a person should be responsible for paying for their own long-term care needs and 14 percent of those polled reported that one's family should be the one to shoulder these costs.

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