Increase in Medicare Co-Payment for Skilled Nursing Care

Medicare is not long-term care insurance.  Medicare does not pay for long-term care, other than a portion of the skilled care that an individual may require after a stay in a hospital.

According to the Medicare statute, if a person is in a hospital for at least three days and then goes into a facility for skilled nursing care, then Medicare will pay for the first 20 days and then a portion of the remaining 80 days.  According to the federal regulations, the daily co-payment is equal to one-eighth of the hospital deductible amount.

In 2020, the daily co-payment was $176.00.  Effective January 1, 2021, the Medicare co-payment for skilled care has increased by approximately 5.4%.  The new co-payment for skilled care in a facility is now $185.50.

Based upon the new changes in the Medicare co-payment, an individual who requires skilled care in a facility for at least 100 days but does not have supplemental health insurance to cover the co-payment, will have to pay the Medicare co-payment of $14,840.00.  In other words, that individual will be responsible to pay the facility $14,840.00 for the 80 days of skilled care.

New Medicaid Income Cap for 2021

There are three requirements to obtain Medicaid assistance to pay for long-term care.  A person must be in clinical need of Medicaid, satisfy the resource requirements and have an income that is less than the income cap.  If a person has a gross monthly income that is greater than the income cap then he or she will not qualify for Medicaid unless their income is deposited into a Qualified Income Trust, also known as a QIT.

Prior to 2021 the income cap in New Jersey was $2,349.00.  The income cap is based upon the maximum monthly benefit for an individual who receives Supplemental Security Income, also known as SSI.  The maximum monthly SSI benefit in 2020 was $783.00. 

In 2021, the maximum monthly SSI benefit is $794.00.  Therefore, the Medicaid income cap is now $2,382.00.  This is three times the amount of the maximum monthly SSI benefit.

In summary, a person is not allowed to have a gross monthly income in excess of $2,382.00 in order to qualify for Medicaid.  If that person does have excess income then he or she must establish a QIT in order to acquire Medicaid assistance.

Medicaid Trap: First Moment Rule

Applying for Medicaid assistance to help pay for long-term care can be a daunting task.  There are numerous rules and regulations that often present significant problems for individuals who are attempting to obtain Medicaid.  Many people refer to these as “traps”.  One of the most common problems, or traps, is the failure to adhere to Medicaid’s first moment rule.

According to the New Jersey Medicaid regulations, an individual must own less than $2,000 of resources in order to become eligible for Medicaid.  The applicable New Jersey Medicaid regulations specifically state that the resources of that individual must be worth no more than $2,000 as of the first moment of the first day of each month. 

The first moment of the first day of each month is really the last day of the previous month.  If a person owns assets worth $2,100 as of the last day of the previous month, then he or she will not be eligible for Medicaid for the entire following month.

There is a New Jersey Medicaid regulation that provides that changes in the amount of resources during the month will not affect Medicaid eligibility.  Therefore, if a person owns $1,900 of resources as of the last day of the month but then receives $2,000 of income during the first week of the following month, then he or she will still be eligible for Medicaid for the entire month, even though they may now have approximately $4,000 in the bank.  As long as the funds in the accounts are spent down to less than $2,000 by the end of the month, he or she will qualify for Medicaid.  Please keep in mind that resources include not only funds in the bank but also other assets that can be converted to cash, including any money held in a personal needs account at a facility.

As long as the funds in the accounts are spent down to less than $2,000 by the end of the month, he or she will qualify for Medicaid. 

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.