Medicaid Telephone Hearings

If there is a dispute with the County Board of Social Services concerning Medicaid eligibility, then you have the right to file an appeal of that decision.  The request for an appeal is filed with the Fair Hearing Unit of the Division of Medical Assistance and Health Services (DMAHS) located in Trenton, New Jersey.  If the appeal is timely filed then the DMAHS will transmit this case to the Office of Administrative Law and it will be assigned to an Administrative Law Judge.

Prior to the COVID-19 pandemic the hearings would take place in a courtroom.  The Administrative Law Judge would preside over the hearing in a courtroom, which was usually a municipal court located in the county where the Medicaid agency was located.  For example, in many cases involving the Camden County Board of Social Services the hearing would take place at the Haddonfield Municipal Court.

Since the summer of 2020, all of the hearings have taken place by way of a telephone hearing.  The hearings have not been held in a courtroom.  Most of the hearings have not been held through remote platforms, such as Zoom.  Rather, most of the hearings are conducted by way of a telephone conference with the Administrative Law Judge that is assigned to the case.

Both the Petitioner (the person who is seeking Medicaid) and the County Board of Social Services are required to file and serve the relevant documents and evidence prior to the telephone hearing.  The Administrative Law Judge will review the documents prior to the hearing.  Both parties will then be afforded an opportunity to attend the telephone hearing and present legal arguments with respect to the issues that are being addressed by the Administrative Law Judge.

Long-Term Care Insurance Partnership

If a person obtains a long-term care insurance policy that satisfies federal law, then assets can be protected from Medicaid and the cost of long-term care.

Congress passed a law approximately 15 years ago that provides an incentive to acquire long-term care insurance.  If a person obtains a long-term care insurance policy that satisfies this federal law, then assets can be protected from Medicaid and the cost of long-term care.

The applicable federal law is known as the Federal Deficit Reduction Act of 2005.  A provision in this federal law allows individuals to protect assets if they acquire a long-term care insurance policy that satisfies the requirements of the Long-Term Care Partnership Program.  New Jersey implemented a long-term care partnership program in accordance with this federal lawNew Jersey’s regulations concerning this program went into effect on July 1, 2008.

According to the New Jersey Long-Term Care Partnership Program, individuals who purchase long-term care insurance policies that meet with the requirements set forth in the federal law can protect assets that equal the insurance benefits received under the policy.  For example, if a person buys a long-term care insurance policy with a value of $300,000 then that individual can protect assets worth $300,000.

Federal law requires that the Commissioner of Banking and Insurance must certify that the long-term care insurance policy meets consumer protection requirements necessary for a policy to be qualified.  For example, it must include an inflation protection based upon the individual’s age at the time the policy is issued.

Federal Court Allows Annuity Strategy to Protect Assets

The United States District Court for the District of New Jersey has issued an important decision concerning the use of annuities for Medicaid planning.  The Honorable William J. Martini rendered this favorable decision in the case of Jane Cushing v. Jennifer Langer Jacobs, et al; Docket 20-cv-130.

The legal issue presented in the Cushing decision concerned the legality of an immediate annuity with an insurance company which was designed to protect that person’s life savings and assets.  Judge Martini noted in his decision that annuities purchased by Medicaid applicants are not countable assets if they satisfy the federal statute.  The applicable federal statute requires that the annuity be irrevocable, immediate, may not be transferred and it must have no cash or loan value.  In the Cushing case the Court determined that the annuity that was established with the Croatian Fraternal Union of America did satisfy this federal statute.

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The applicable federal statute requires that the annuity be irrevocable, immediate, may not be transferred and it must have no cash or loan value. 

Annuities can be used to shelter assets from Medicaid and the cost of long-term care.  The terms of the annuity, however, must satisfy the stringent requirements of the federal statute.    

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)

Medicaid Laws Change on July 1, 2020

Most nursing homes in New Jersey charge at least $130,000 per year for a basic semi-private room.  Medicaid will help pay for that person’s care but only after their assets and life savings have been depleted.

If a spouse is in a nursing home facility then the couple’s assets as well as income can be protected for the healthier spouse.  The healthier spouse is entitled to support from the institutionalized spouse based upon a complicated formula involving the poverty level for a family of two and certain shelter expenses.  The laws concerning spousal support will change in New Jersey as of July 1, 2020.

Normally a person’s income must be paid to the nursing home facility each month.  Effective July 1, 2020, New Jersey will allow the healthier spouse to acquire spousal support from the institutionalized spouse if the healthier spouse’s income is less than $2,155.00 per month.  The healthier spouse is allowed spousal support based upon the difference between $2,155.00 and his or her monthly income.

In addition to a minimum income of $2,155.00 per month, the healthier spouse is allowed additional support based upon his or her shelter expenses.  Effective July 1, 2020, any shelter expenses, such as rent, mortgage, utilities and property taxes that are in excess of $646.50 per month, will be added to the spousal support.  This is known as the excess shelter allowance.

The recent changes to our Medicaid laws will increase the likelihood that the healthier spouse will receive support from the institutionalized spouse’s income.