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.
In years past, some people would transfer assets to loved ones as a means of lowering their income. In this way, they would qualify for Medicaid without becoming impoverished. However, following the passage of The Deficit Reduction Act of 2005, this is much more difficult to accomplish. This is because the Act instituted a five-year look-back period and imposes a penalty for those who transfer assets within the five years before applying for Medicaid.
However, like many rules, there are exemptions. Some assets that are not subject to the five-year look-back period include: transfers to the spouse of the applicant; transfers to children under age 21, children who have a permanent disability or are blind; transfers to adult children who have served as caretakers for the applicant for at least two years; and others.
So, it is important to not only understand what counts as income for Medicaid eligibility purposes but also understand what effect the transfer of assets will have. Medicaid eligibility is very important for those who plan on using the funds to pay for nursing home care. There are ways to become eligible for Medicaid without having to lose all your assets. An elder law attorney understands what legal options may be available in such situations.