New Jersey Changes Calculation of Penalty for Gifts

If a person provides a gift within five years of the Medicaid application, then there is presumption that the gift was provided for the purpose of establishing Medicaid eligibility.  A person has the right to provide “convincing” evidence that the gift was made for reasons other than Medicaid but it is a difficult burden to overcome.  In most cases a gift provided within five years will result in a period of ineligibility for Medicaid.

The period of ineligibility for Medicaid is known as the penalty period.  The duration of the penalty period is based upon the average cost of skilled nursing care per day in the State of New Jersey.  Until recently, the average daily cost of skilled nursing care in New Jersey was $351.84. 

The New Jersey Division of Medical Assistance and Health Services (DMAHS) has determined that the average cost of skilled nursing care per day in the State of New Jersey is now $357.67.  Therefore, the penalty period is now calculated by taking the value of the gift and dividing it by $357.67.

By way of illustration, if $21,818.00 is transferred as a gift within five years and the County determines that the penalty period commenced on June 1, 2020, then that person will be denied Medicaid assistance for 61 days covering the period of June 1, 2020 through July 31, 2020.  This 61 day penalty period was calculated as follows:

$21,818.00 (Gift)

÷$357.67 (Penalty period divisor)

=61 days (Duration of penalty period)