Our fee to assist a family with protecting assets is $500.00. This fee must be paid at the initial meeting. For this fee, an attorney from this office will meet with a family member for approximately one hour to review all assets and discuss strategies as to how to protect those assets. You will receive a detailed opinion letter within two or three days after the meeting confirming an asset preservation plan. In most cases, there is no additional charge for a follow-up telephone conversation if the client has additional questions after receiving the opinion letter.

Our fee to assist with the Medicaid application is $6,000.00. Payment of this fee is required when you submit your documents to our office for review. Normally, the fee is paid from the applicant’s funds as part of the permitted spend down.

For this fee, the family is provided a checklist setting forth all documentation necessary to apply for Medicaid. (Our Medicaid coordinator will meet with the family to review the checklist and assist with obtaining the necessary documents.) Thereafter, our staff will conduct a detailed audit of all documentation to confirm that it is in acceptable order. Any questions or concerns are addressed prior to the actual application. Finally, our office schedules an appointment on behalf of the family and a staff attorney makes the application on your behalf.

Depending on your case, additional legal documents may be required (i.e. Qualified Income Trust, Deed, etc.). Fees for these documents will be determined at the initial meeting and will be set forth in the opinion letter provided to you.

Prior to the application for Medicaid benefits, the applicant may use his or her income in any manner he or she chooses as part of the permitted spend down. After the application is made, and while awaiting Medicaid approval, the applicant’s income must be paid to the nursing home where the applicant resides. The family should contact the particular nursing home to determine that facility’s procedure for collecting the applicant’s income.

If the Medicaid applicant is married, the community spouse may be entitled to retain a portion of the Medicaid applicant’s income.

Medicaid looks at each individual case to determine if money paid by the applicant to a relative is a gift or repayment of a loan or for items purchased on behalf of the applicant. An applicant can be denied benefits for gifts as small as ten dollars. For this reason, unless clear documentation is presented confirming that monies paid by the applicant to a relative are in repayment of a loan or for items purchased on behalf of the applicant, such funds will be deemed a gift and must be returned to the applicant and spent down before the applicant can obtain Medicaid benefits.

Gifts made by a Medicaid applicant on or after February 8, 2006, no matter how small (i.e. Christmas gifts, wedding gifts, paying for a grandson’s tuition, etc.), in most cases, will prevent an applicant from receiving Medicaid benefits for a period of time, which in every case will result in the applicant paying privately for nursing home care in an amount in excess of the amount of the gift.

The only way to avoid this result is to allow five years to elapse before applying for Medicaid (three years for the Veterans Home) or to return the gift and spend it down on the applicant’s behalf prior to the application for benefits.

When an applicant is married, the community spouse (the spouse living at home) is entitled to retain the marital home, an automobile and one-half of any and all other assets owned by either spouse, but not to exceed a value of $130,800.00 as of 2022 (this figure changes slightly year to year). In calculating the amount a community spouse can retain, the Medicaid office will take a “snap shot” of the assets owned by both spouses as of the month that the spouse enters a hospital prior to the applicant’s admission to a nursing home or began receiving continuous in-home care. Medicaid determines how much can be retained by the community spouse based upon the value of assets as of that month.

All assets held in a joint account are presumed to be owned by the Medicaid applicant and for this reason are not protected unless it can be proven that the funds in the account were contributed by the other party. This is true even if the child’s social security number is on the account. The only way for the Medicaid applicant to protect assets is to completely divest himself or herself of those assets rather than to hold them in joint names. This is also true of assets held by the applicant in trust for another person such as a grandchild. These assets are also deemed owned by the Medicaid applicant and therefore not protected.

Assets held under the Uniform Gifts for Minors Act, however, are deemed protected because the Medicaid applicant is required, under law, to use those assets for the minor and for no other reason.

Usually, Medicaid permits prepayment of the funeral for both the Medicaid applicant and the Medicaid applicant’s spouse provided the cost is reasonable, which in most cases is interpreted to be no more than $15,000.00 for each funeral.

IRAs are not a protected asset under the New Jersey regulation pertaining to Medicaid. Accordingly, if you are a single individual, you are only entitled to retain $2,000.00. This means that all assets, including your IRAs, must be spent down to this amount in order to receive Medicaid benefits. If married, the community spouse can only retain one-half of all liquid assets not to exceed a value of $130,800.00 as of 2022. This can result in the necessity to spend down an IRA even if it results in an adverse tax consequence.

In most cases, annuities are not a protected asset and are treated the same as IRAs or any other asset. Certain annuities, however, are protected. Such annuities must be based upon the life expectancy of the applicant and have a provision that Medicaid be paid back from any lump sum payment made after death to the extent that Medicaid has paid for the applicant’s care, in addition to meeting other requirements.

Medicaid deems the cash surrender value of any life insurance policy to be an asset which must be spent down like any other asset. Life insurance policies with no cash surrender value, however, will not interfere with the ability of an individual to receive Medicaid benefits.

In some instances, the home is a protected asset without the need of transferring title. For this reason, it is not always necessary to transfer title of your home to your children. For instance, if a spouse needs Medicaid, the spouse living in the home (the “community spouse”) is entitled to retain title without interfering with the applicant spouse’s benefits.

In addition, a Medicaid applicant may be entitled to transfer the home to a child without incurring the five-year penalty period pursuant to the caregiver child exception.

In addition, a parent can transfer his or her home to a disabled child without incurring the five-year penalty period.

These exceptions are quite narrow in scope. In order to take advantage of these exceptions the family must have met certain conditions.

Since no penalty period is incurred when transferring a house under the caregiver-child exemption or to a disabled son or daughter, there is no need in such cases to make the transfer until the Medicaid application has been completed.

In cases where there is no exception, it may be necessary to transfer the home while the parent is still healthy in order to allow the five-year penalty period to run prior to placement in a nursing home.

In many instances, it is advisable to transfer real estate to the children subject to the parent’s life estate. By retaining a life estate, a parent can continue to receive the New Jersey homestead rebate as well as the Veterans discount on real estate taxes. More importantly, the capital gains tax paid by the children upon the sale of the property will be significantly reduced provided the sale takes place after the parent’s death.

Whenever transferring the home it is important to understand the gift tax ramifications as well as any capital gains tax or estate tax issues raised by the transfer. Accordingly, although it is a simple matter to prepare a new Deed, it is important that the family understand all issues surrounding any transfer of real estate.


Andora & Romano, L.L.C. provides the information found on this website for informational purposes only. It is not intended to, and does not, constitute legal advice or a legal opinion, nor does it create an attorney-client relationship between Andora & Romano L.L.C. and any viewer of this site. You should not rely upon any information that you obtain from this site without first seeking the advice of an attorney regarding the facts of your specific situation. The information on this website is intended to be accurate and current. We do not promise or warrant, however, that the information that you find here is complete, accurate or up-to-date.

The regulations governing the Medicaid program are highly complex and subject to change. We therefore recommend that you retain the services of an Elder Law Attorney rather than attempt to navigate the system unassisted.

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