How Do I Apply for Medicaid Benefits in New Jersey

Medicaid is a federal and state health payment plan for needy individuals.  If an individual qualifies for Medicaid benefits, Medicaid will pay for many of the costs associated with their health care.  There are many different Medicaid programs.

Many people come to me to qualify for Medicaid benefits.  I work with a program of New Jersey Medicaid called Managed Long Term Services and Support or MLTSS.  The program is as complicated as its name.  MLTSS, unlike many other programs of Medicaid, will pay for long term care services, such as care in a nursing home, an assisted living residence, or a home health aide in the home setting.

Most of my clients are elderly, hence I market myself as an elder law attorney; however, it is not unheard of for someone who is younger to require long term care services, and the Medicaid program and the laws governing that program are no different than those that apply to elderly individuals.

When you apply for MLTSS, you apply with the county board of social services for the county in which the applicant resides.  If the applicant lives her entire life in Monmouth County but now were residing in a nursing facility in Ocean County and she wasn’t expected to return to her home, then I would apply in Ocean County because that is the county in which she now resides.

All counties have a county board of social services, though, I believe, some counties share offices.  In the Central New Jersey region of the state, each county has its own offices, and those are the counties with which I deal the majority of the time.

As I mentioned, the Medicaid program is a federal and state program.  Both the federal government and the state of New Jersey share in the costs associated with the program.  I’m unsure of the exact breakdown, but New Jersey might pay 50% of the costs and the federal government might pay half the costs.  I believe the contribution figures vary from state-to-state, so a poorer state might pay less of a cost share than New Jersey pays.

The federal government and New Jersey have entered into a contract regarding the administration of the program.  In New Jersey, the Division of Medical Assistance and Health Services, which is part of Department of Human Services, administers the Medicaid program.  The Division then contracts out the work of handling the individual Medicaid application intake and review work to the counties.  Each counties board of social services is responsible for taking the applications and reviewing the applications.

The counties all accept applications by mail.  For the past several years, I have typically mailed in my applications.  Since I have filed hundreds of applications, I am quite familiar with the documentation that the county seeks when an individual is applying for Medicaid benefits.  The paperwork the county seeks is voluminous and can be quite intimidating to the inexperienced.

If you have never applied for Medicaid benefits before, I would recommend applying in person, not via mail.  A caseworker at the county is responsible to assist you with the application; however, I also tell people that no application for Medicaid benefits is “simple.”  Even an applicant with supposedly simply finances has some issue arise in the Medicaid application process.

While the county is responsible to assist you with the application, I also believe that the county often looks skeptically upon applications.  The skepticism is built into the application system.  There is a five-year lookback period, which means that Medicaid is looking at the last five years of your finances when you apply.  The reason they are looking at this period of time is to see if you made any gifts, which would render you ineligible for Medicaid benefits.

The lookback review is the biggest aspect of the Medicaid application, so you can see how there is skepticism built into the system; essentially, the county is saying prove to me through documentary evidence that you did not make a gift. If you fail to satisfy their proof request, you will be denied Medicaid benefits.

Who Is a Typical Medicaid Planning Client

How does a person qualify for Medicaid benefits? The answer to this question varies depending on the person’s individual circumstances; however, a person’s marital status has a tremendous effect on a person’s eligibility for Medicaid benefits.  It is often far easier to qualify a married individual for Medicaid benefits than it is a single person. Furthermore, while anyone could qualify for Medicaid benefits, not everyone will want to qualify.

Let’s assume that the client resides in a nursing home.  If the client is single, he can only retain $2,000 in countable resources.  In this case, countable resources include all assets the person owns with limited exceptions, such as personal goods and household effects, a car, and a prepaid funeral.  If the client owns a home and is not expected to return to the home—in other words, she is expected to live in the nursing home, not at home—then the home must be listed for sale.

With a married couple, the situation is a bit more complicated.  The client can retain the same countable resources—personal goods and household effects, a car, a prepaid funeral—but the spouse who is residing at home also can retain certain assets.  The spouse living at home–called the community spouse because he is residing in the community, and not at home–can retain significant assets without affecting the institutionalized spouse’s eligibility for Medicaid.

For one, the community spouse can retain the home, irrespective of the home’s value. The community spouse can also retain up to $126,420 in countable assets (bank accounts, stocks, bonds, IRAs, etc.).  The ability to retain these assets is a major boon for the institutionalized spouse’s eligibility for Medicaid benefits.  For instance, if Mr. and Mrs. Smith own a home worth $300,000 and bank accounts worth $260,000, Mr. Smith (the community spouse) can retain the home and $126,420.  In this scenario, most of the Smith’s assets are preserved for Mr. Smith’s benefit.

In addition, Mr. Smith can retain all of his income. So, if we convert the excess countable assets, about $130,000 in the above example, into a stream of income that belongs to Mr. Smith alone, Mr. Smith would end up retaining all of the couple’s assets.  The Smiths can convert the excess countable resources into a steam of income by purchasing a Medicaid-complaint annuity.

I always tell clients that the typical Medicaid planning client has between $50,000 and $700,000 in total assets, including the home. For instance, Medicaid planning is not for people who are worth more than $2,000,000.  While it is possible to achieve Medicaid eligibility for people who have substantial assets, it is impractical for people with substantial assets to attempt to qualify for Medicaid.

Most people with substantial assets have a significant portion of those assets invested in tax-deferred accounts, such as IRAs. If Mrs. Smith has $750,000 in an IRA, then she would have to remove that money from her IRA before she could qualify for Medicaid benefits.  Removing $750,000 from an IRA would result in a significant income tax liability.  The Smiths would have to take this significant tax liability into consideration before seeking to qualify Mrs. Smith for Medicaid benefits.

Furthermore, people with $2,000,000 in assets typically aren’t willing to give away their assets in order to qualify for Medicaid benefits. For instance, the Smiths probably would not want to transfer $1,500,000 of their assets to their children in order to qualify Mrs. Smith for Medicaid.

While, theoretically, anyone can qualify for Medicaid benefits, the reality is there is a financial range in which the average Medicaid planning client is found. Those with assets well in excess of that range would likely find Medicaid planning too financially painful.