Stimulus Check, SSI and Medicaid

The Coronavirus Aid, Relief and Economic Security Act, also known as the CARES Act, was enacted on March 27, 2020 as Public Law 116-136.  It is a $2 trillion economic stimulus bill.  The goal of this legislation is to provide relief to individuals and businesses that have been impacted by the coronavirus crisis.

Many individuals will receive $1,200 as an economic stimulus payment.  The payment of $1,200 should not affect Medicaid eligibility as long as the funds are spent down within 12 months.

According to applicable federal law, the New Jersey Medicaid program is not allowed to have more restrictive income and resource requirements than Supplemental Security Income, also known as SSI.  If an individual qualifies for SSI based upon income and assets, then he or she will also be eligible for Medicaid in the State of New Jersey.

Social Security will not consider the economic impact payments of $1,200 as income for SSI beneficiaries.  In addition, the payment of $1,200 is excluded from resources for 12 months.  Based upon federal law, Medicaid must also treat the payment of $1,200 in the same manner as SSI.

The payment of $1,200 will not be considered by Medicaid to be income.  In addition, the $1,200 received from the government will not be considered a resource as long as the funds are spent down within 12 months. 

Nursing Home Negligence and COVID-19

The statistics for elderly and disabled individuals in nursing home facilities is grim.  In the State of New Jersey, at least 53% of those who passed away from COVID-19 were residents of nursing home facilities.

New Jersey Attorney General Gurbir Grewal is investigating the possible negligence of nursing home facilities in dealing with COVID-19.  The Attorney General announced the investigation after reports of how the nursing homes were treating their residents, the manner in which facilities were disposing of dead residents, the lack of communication and the pure negligence by many facilities.  There was a recent discovery of 17 bodies in a morgue that was set up at a nursing home facility in New Jersey.

There is now an online form for family members to report nursing home misconduct.  The Attorney General is in charge of the online form and will process the request for an investigation into possible misconduct by a nursing home facility.  If you believe there was misconduct by a nursing home facility in New Jersey, then please complete the online form at the following address: https://covid19.nj.gov/forms/ltc

Medicaid Does Not Allow Gifts of $15,000 Per Year

If a person provides gifts within five years of the Medicaid application, then the County Board of Social Services will presume that those gifts were provided for Medicaid planning.  The individual who provides gifts within five years of the application will be denied Medicaid for a period of time known as the penalty period.  The duration of the penalty period is based upon the value of the gifts provided by that individual.

Many people mistakenly believe that they can gift up to $15,000 per year and that this will not have an effect on Medicaid eligibility.  This is absolutely false.  Medicaid does not allow a person to gift up to $15,000 per year without jeopardizing eligibility for assistance. 

The IRS allows a person to gift up to $15,000 per person each year without having to file a gift tax return, known as Form 709.  If a person were to gift more than $15,000 in one year to a person, then the individual who provided the gift would have to file a gift tax return.

Medicaid does not recognize or follow the rules set forth in our tax code.  There is no exemption for a gift of $15,000 or less in the context of Medicaid eligibility.  Although a gift tax return does not have to be filed for that gift, it will have an impact on that individual’s ability to acquire Medicaid to pay for long-term care.  

Remote Notary Law

Governor Murphy has signed a bill into law that now allows for remote notarial acts during the coronavirus pandemic emergency.  This new law is effective immediately and will continue to be valid until the rescission of Governor Murphy’s Executive Order 103.  On March 9, 2020, Governor Murphy signed Executive Order 103 declaring a State of Emergency for New Jersey due to the coronavirus crisis.

According to this new law, a notary public can remotely notarize a document if the following conditions are satisfied.  First, the notary public must use “communication technology”, which means that it is an electronic device that allows the notary public to communicate with another person “simultaneously by sight and sound”.  The notary public must either have personal knowledge of the identity of the individual who is signing the document or have satisfactory evidence of the identity of the person.  The term “satisfactory evidence” means a passport, driver’s license or other government issued identification.  The identification must be current or if it is expired then it must not have been issued more than three years prior to the execution of the document.

In order for the remote notary to be valid in the State of New Jersey, the notary public must create an audio-visual recording of the signing of the document.  Therefore, unless the signing of the document is not recorded it will not be valid.  Also, the recording must be preserved for a period of 10 years.

This new law does not apply to the signing of a Will or a Codicil to a Will.  Also, this new law will expire as soon as Governor Murphy rescinds Executive Order 103 that declared a State of Emergency.

Change in Medicaid Laws: Minimum Amount Increases for Healthier Spouse

When a healthier spouse requires long-term care in a nursing home facility, then that care can quickly deplete the family’s life savings.  Fortunately, there are federal and state laws that prevent the healthier spouse from being impoverished.

When a spouse requires long-term care in a nursing home facility, then the healthier spouse can keep the house, car, personal effects and a portion of the remaining assets.  The portion of the remaining assets that the healthier spouse can keep is known as the Community Spousal Resource Allowance, or CSRA.

In many cases, the healthier spouse can keep one-half of the cash assets as his or her CSRA.  These are assets that the healthier spouse can keep and not use for the other spouse’s long-term care needs in a nursing home.  Federal law sets forth a minimum amount that the healthier spouse can keep.  Last year the minimum amount that the healthier spouse can keep was $25,284.00. 

Effective January 2020, the minimum amount that a healthier spouse can keep as his or her CSRA is $25,728.00.  By way of illustration, assume that the husband and wife own a house, automobile and cash assets of $40,000.00.  The healthier spouse can keep the house, automobile and $25,728.00 of the cash assets.  The balance of the cash assets of $14,272.00 will have to be spent down in order to qualify the institutionalized spouse for Medicaid assistance.

Additional Rules Concerning a Qualified Income Trust

New Jersey permits a person to reduce his or her monthly income below the Medicaid income cap through the use of a Qualified Income Trust, also known as a QIT.  There are legal requirements, however, for the establishment of a QIT.

 The trust must provide that New Jersey is the primary beneficiary of the trust when the person passes away.  In addition, the trust must contain only income from the individual.  Federal and state law prohibits the deposit of assets into the trust.

The rules governing a QIT differ in each state.  Some states allow a portion of a person’s income to be deposited into the QIT each month.  According to New Jersey law, an entire income from a source must be deposited into the QIT.  By way of illustration, if a person receives $1,200.00 gross per month from Social Security and a gross monthly income of $1,200.00 from a pension, then that person’s income is only $51.00 greater than the Medicaid income cap.  That person, however, will not be allowed to deposit $52.00 from Social Security or the pension into the QIT per month.  Rather, New Jersey law requires that $1,200.00 from either the pension or Social Security be deposited into the QIT each month.

The Trustee must adhere to the laws that govern Medicaid eligibility.  New Jersey law requires that the Trustee provide an annual accounting of the distributions made from the trust.  New Jersey requires that the bank statements and documents relating to the QIT be provided each year to the County Board of Social Services.

If all of the laws relating to the QIT are satisfied, then the income that is deposited into the QIT will not be considered “income” for purposes of determining Medicaid eligibility.  The income that is deposited into the QIT each month will reduce that person’s income for purposes of establishing Medicaid eligibility.

If a person’s gross monthly income is more than the Medicaid income cap of $2,349.00, then he or she can still qualify for Medicaid as long as a QIT has been prepared and has been established and maintained in accordance with applicable federal and state Medicaid laws.

Qualified Income Trust Can Reduce Income to Qualify for Medicaid

In order to qualify for Medicaid to pay for long-term care, a person must have little assets and must also have a monthly income that is less than the “income cap”.  Beginning January 2020, the Medicaid income cap in the State of New Jersey is $2,349.00.

If a person has a gross monthly income of more than $2,349.00, then he or she will not qualify for Medicaid assistance even if that person has virtually no assets.  New Jersey, however, allows a person to reduce their gross monthly income below the income cap through the use of a special trust known as a Qualified Income Trust.  The Qualified Income Trust is commonly referred to as a “QIT”.

 In order to establish a QIT, a trust agreement is prepared and signed by the person who needs long-term care and another individual who is the Trustee.  In many cases the individual who has power of attorney can sign the trust agreement on behalf of the individual who needs long-term care.

 The trust agreement must set forth that the person’s monthly income will be deposited into the trust and will be utilized for that individual’s long-term care needs.  The trust must be “irrevocable”.  This means that the trust cannot be revoked or canceled. 

Both federal and state law requires that the trust agreement provide for reimbursement of Medicaid benefits to the State of New Jersey.  New Jersey must be the primary beneficiary of the trust agreement.  When that individual passes away, then New Jersey will be reimbursed for all of the Medicaid funding that the person received from Medicaid.  Any remaining balance of the trust assets will then be paid to the person’s beneficiaries and heirs.