Long Term Care Strategies to Protect Income and Assets When a Decision to Accept Hospice is Made
Long-term care strategies: You should seriously evaluate the availability of government benefit programs under hospice. For instance, Medicaid, a federally funded program administered by New Jersey, may pay some health care costs (assistance with bathing, light housekeeping, cooking and laundry and others), while an eligible patient remains at home. But there are strict rules about how you can qualify for this and other available benefits. With that in mind, let’s review the basics of NJ Medicaid and Hospice and how to qualify. The reasons for discussing Medicaid and hospice are because if a surviving spouse is aged and/or in serious/failing health, the planning options are optimum in protecting a family’s lifetime of savings and income, especially for the surviving spouse and adult children, particularly adult disabled children.
The Basics of NJ Medicaid Eligibility as Part of Hospice Planning
In order to understand Medicaid qualification, you first need to know how Medicaid treats your assets and those of your spouse, if married.
Basically, Medicaid breaks your assets down into two separate categories. The first are those assets which are generally exempt, and the second are those assets which are non-exempt, or countable.
Exempt assets are those which Medicaid will not generally (but not always) consider at this time. The following assets are generally exempt:
- Home (under certain restrictive conditions and qualifications). You must consult with an experienced NJ elder law and hospice attorney to discuss if your home is exempt. The home must also be the principal place of residence. The resident may be required to show some intent to “return home” even if this never actually takes place. If not, the home is subject to liquidation. Single persons are not allowed to exempt a home as a rule, although there are exceptions which can be explained by a NJ elder law attorney.
- Household and personal belongings such as furniture, appliances, jewelry and clothing.
- One vehicle (a car or truck or van). Unless you are single and will not return home.
- Pre-paid funeral plans and burial plots
- Cash value of life insurance policies – Up to $1,500 in cash surrender values may be exempt, along with term life insurance, depending upon your situation.
- Cash (e.g. a small checking or savings account), not to exceed $2,000.
Other assets, such as IRAs, 401(k) plans, income-producing real estate, and so on are generally countable depending upon your situation.
The assets which are not exempt are then considered countable. This typically includes checking accounts, savings accounts, certificates of deposit, money market accounts, stocks, mutual funds, bonds, most IRAs, most pension plans, second cars, and so on.
While the Medicaid rules themselves are complicated and somewhat tricky, for a single person, it’s safe to say that without proper planning in New Jersey, you will only qualify for Medicaid when you only have exempt assets, plus a small amount of cash; in other words, you are “poor”.
What is Division of Assets Under NJ Medicaid?
Division of assets is the name commonly used for the Spousal Impoverishment provision of the Medicare Catastrophic Act of 1988. It applies only to married couples. The intent of the law was to change the eligibility requirements for Medicaid in situations where one spouse needs nursing home care, while the other spouse remains in the community (i.e. at home or in an assisted living facility). Since then, changes in NJ law have now allowed spouses who are at home to sometimes qualify for Medicaid assistance for certain home and community-based services under the Global Options program.
Basically, in a division of assets under NJ Medicaid law, a married couple gathers all their nonexempt (i.e. countable) assets together. The exempt assets are the ones described earlier, such as the home, one vehicle, and so on. The non-exempt assets are then divided in two, with the community (or at home) spouse allowed to keep one-half of all the countable assets, up to a maximum of approximately $126,420 (2019 figure to be adjusted in 2020 in order to qualify for Medicaid long term care). The other one-half of the assets must then be “spent down.”
In other words, there is a married couple who has $100,000 in countable assets, then through a division of assets, the well spouse, or community spouse, will be able to keep one-half of those assets (i.e. $50,000 in this example) and the ill spouse would be allowed to keep his or her $999 to $2,000.
The laws in New Jersey are very tricky as to exactly how the spend-down is completed. Suffice it to say that someone who is pursuing Medicaid eligibility should consider a strategy of spend-down. The main rule to keep in mind is that whatever goods or services are purchased must be done at fair market value and must be for the benefit of the patient and/or for the spouse.
If you would like to speak to a NJ hospice attorney who can work with you to protect your family’s assets and income, contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at email@example.com to schedule a consultation about your particular needs. He welcomes your calls and inquiries and you’ll find him very approachable and easy to talk to.
Written by Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a New Jersey Hospice Care Attorney
Asset and Income Protection | NJ Hospice | Asset Protection | Hospice and NJ Medicaid New Jersey Hospice Long Term Strategies