How To Apply for Medicaid Benefits

Medicaid is a government health payment plan for needy individuals.  If a person qualifies for Medicaid, it will pay for many of the costs associated with long-term care.  Since long-term care can cost up to $14,000 a month in this area of the state, many people who never thought they would need to qualify for Medicaid do need to qualify when they require long-term care.

Applying for Medicaid benefits is a lot of work.  By law, the Medicaid Office is supposed to process an application for Medicaid benefits in forty-five days.  In practice, that almost never happens.

You file an application for Medicaid benefits with the board of social services serving the county in which the applicant resides.  For example, if your mom is in a nursing home in Monmouth County, then her application for Medicaid benefits would be filed with the Monmouth County Division of Social Services.  Monmouth County has offices in Freehold and Ocean Township at which the application can be filed.

In and of itself, the application is not that complicated.  You could probably complete the application in under one hour.  What makes the application process more complicated is the supporting materials the application requires.

The Medicaid Office will request five years’ worth of financial statements for every financial account the applicant owned in the five years preceding the date of application—every bank account, every brokerage account, every annuity.  Inevitably, these statements will cause the Medicaid Office to have questions about the applicant’s financial affairs during that five year period of time.  Primarily what the Medicaid office is concerned with is gifts that the applicant may have made.

Many elderly individuals gift assets to family members.  The applicant may have consciously made the gift or the applicant may have simply paid a bill that a family member owed.  All of these events are gifts, and gifts cause the applicant to be ineligible for Medicaid benefits for a period of time.

The Medicaid Office will also ask for personal documentation for the applicant—his birth certificate, his spouse’s death certificate, Social Security card, health insurance card, etc.  The Medicaid Office will also need to see a statement that shows his monthly income on a gross and net basis.  Any taxes that are being deducted from the applicant’s income will need to be stopped.

If the applicant’s gross income exceeds $2,205, then a portion of his income will need to be placed into a trust, called a qualified income trust.  The trust will need to be drafted and trustees will need to be named.  A bank account in the name of the trust will need to be established.

The application process could take four to six months to complete.  During that period of time, the Medicaid Office will inevitably have questions.  If the applicant fails to respond to any of the questions that the Medicaid Office asks, the application can be denied for lack of cooperation.

While the applicant might believe that the requests for information were irrelevant or overly burdensome, the fact of the matter is, appealing a denial for lack of cooperation is often a losing battle, so it is best to try your hardest to cooperate with the Medicaid Office’s request, no matter how irrelevant or burdensome you may believe the requests to be.

This may sound self-serving, but I believe it is always better to be represented by an attorney when filing an application for Medicaid benefits.  For applicants who reside in nursing homes and assisted living residences, in many cases, the applicant is simply paying all of his assets over to the nursing home.  He could either pay another month at the nursing home or pay for competent legal advice, either way the money is being spent, but by hiring an attorney, the family can have the peace of minding in knowing that the application is being handled in a proper manner.

One Lawyer’s Advocacy

Am I ineligible for Medicaid? Recently, the New Jersey Medicaid program issued a letter increasing the uncompensated asset transfer penalty divisor.  The penalty divisor figure is used to calculate the period of time an applicant for Medicaid benefits is ineligible for benefits when he makes an uncompensated asset transfer during the lookback period.

Medicaid is a federal and state health payment plan for needy individuals.  If an individual qualifies for Medicaid, the program will pay for many of the costs associated with long-term care, such as care in a nursing home or assisted living residence.

For this reason, many people come to me seeking to qualify for Medicaid benefits when a family member resides in a nursing home. In a great many cases, I can save the family tens of thousands of dollars and qualify the family member for Medicaid benefits sooner than they would have qualified without Medicaid planning.

Long-term care facilities cost a lot of money. A nursing home in this area costs anywhere from $9,500 to $14,000 a month.  An assisted living residence can cost anywhere from $5,000 to $10,000 a month.

In order to qualify for benefits, an individual must have a very limited amount of assets.  Some people believe they can simply give their assets away and qualify for benefits.

In order to punish individuals who seek to impoverish themselves artificially and qualify for benefits, the Medicaid program punishes applicants who give their money away in order to qualify for benefits.  The way Medicaid punishes an applicant who gives away assets is by making the applicant ineligible for benefits for a period of time.  The more money the applicant gave away, the longer he will be ineligible for Medicaid benefits.  Only transfers made within a certain time prior to applying for Medicaid benefits are punished.

The Medicaid program only punishes gifts that were made within five years of applying for benefits.  This is called the lookback period.  If the gift were made before the lookback period, then the gift cannot be punished.  For instance, if Mr. Smith gave away $1,000,000 six years before he applied for Medicaid benefits, the gift of $1,000,000 cannot be punished.

Medicaid assesses a penalty period by taking the aggregate of all gifts made during the five-year lookback period and dividing that figure by a divisor figure, which is currently $12,000.  In other words, if Mr. Smith gifted $144,000 in the past five years, Medicaid would take the $144,000 in gifts and divide that figure by $12,000.  The result of this division is 12.  Twelve is the number of months for which Mr. Smith would be ineligible for Medicaid benefits.

The $12,000 figure is based upon the statewide average cost of nursing home in the state of New Jersey.  That is the figure the State must use to calculate the penalty period.  For years, the State used an artificially low divisor figure, resulting in penalty periods that were inappropriately long.

Several years ago, I sued the state of New Jersey in federal court over the divisor figure.  As a result of that federal law suit, I was able to have the State enter a consent agreement with my client whereby the State agreed to survey annually the cost of all nursing homes in New Jersey and recalculate the divisor figure after conducting that survey.

The new $12,000 figure is a direct result of that settlement agreement.  The figure represents an accurate divisor figure, and a win for thousands of individuals across this state.  A direct result of my efforts on behalf of my client continues to pay off today for thousands of people.