There are several government benefits for which an individual who requires long-term care can qualify.  Caution should be exercised when seeking to qualify for these benefits, as qualification for one benefit may disqualify you from another benefit.

Assisted living residences in New Jersey may cost anywhere from $3,500 to $8,500 a month, with the average being somewhere around $6,500.  Most people cannot afford to pay $6,500 a month for very long without bankrupting themselves.

Medicaid is a government health insurance program for needy individuals.  In order to qualify for Medicaid, an individual must have a limited amount of assets, typically less than $2,000.  In New Jersey, if the individual is seeking to qualify for Medicaid in an assisted living residence, he must also have gross income less than $2,130.

The $2,130 monthly income figure is a gross figure, so you need to add back any deductions that may be taken from the applicant’s income, such as deductions for taxes and health insurance, including the deductions for Medicare premiums.  The Medicaid program in New Jersey also includes any benefit the applicant may be receiving from the Veterans Administration as an income item.

A common benefit that many veterans or their spouses receive is called Aid and Attendance.  Aid and Attendance or A&A is a cash benefit given to veterans or the spouse of a deceased veteran if the veteran’s assets are low and if the veteran’s medical expenses exceed his income.  The A&A benefit can be anywhere from approximately $1,100 a month for the spouse of a deceased veteran to $2,100 a month for the veteran.

While A&A sounds great, the benefit can impact the veteran’s eligibility for the Medicaid program in an assisted living residence.  For instance, if the veteran has Social Security income of $1,500 a month and assets of $1,000 a month, he would qualify for Medicaid; Medicaid would pay for the costs of his care in the assisted living residence.  So, if this veteran had a monthly assisted living residence bill of $6,500, he would only owe his income to the facility if he qualified for Medicaid.

Now, if that same veteran received an A&A benefit of $2,100 a month, his total income with A&A and Social Security would be $3,600, far in excess of the $2,130 limit for him to qualify for Medicaid.  While $3,600 sounds like a good amount of monthly income, it is insufficient to pay the veteran’s $6,500 monthly assisted living residence bill.

In reality, the Medicaid program is supposed to disregard the A&A benefit.  The laws governing the Medicaid program state that A&A is a non-countable income item that should be disregarded when processing a Medicaid application.  In fact, the A&A benefit is greatly reduced after the veteran, or his spouse, qualifies for Medicaid benefits.

But what should happen and what does happen are often two different things.  Currently, a group of lawyers is suing the State in federal court over this issue.  These lawyers have filed a class action lawsuit asking the federal court to enjoin the State from treating A&A as income when the Medicaid applicant’s unreimbursed medical expenses exceed his income, as those expenses would in the example that I provided above.

Until then, beware.  While logic would say a person should qualify for as many benefits as he can, logic sometimes has no place in the real world.

Government benefit programs each serve a different purpose. Understanding how they work together can help you maximize available benefits while avoiding unintended consequences.