New Jersey has two programs that pay for nursing home care, “Medicaid Only” and “Medically Needy”. Medicaid Only has broader coverage than Medically Needy, which does not cover in-patient hospital care, pharmaceuticals outside of the institution or chiropractic services. The financial requirements of the two programs differ as well. Medicaid Only recipients must have no more than $2094 per month of income. This number increases a little every year to keep pace with inflation. There is no income limitation for Medically Needy. If the income limit can be met, the Medicaid Only program is typically the more desirable one.
Exempt Assets and Countable Assets: What Must Be Spent?
To qualify for either Medicaid program, applicants must pass some fairly strict tests on the amount of assets they can keep. To understand how Medicaid works, we must first review what are known as exempt and non-exempt (or countable) assets. Exempt assets are those which Medicaid will not take into account (at least for the time being). In general, the following are the primary exempt assets:
- The Home (equity up to $786,000). The home must be the principal place of residence. The nursing home resident may be required to show some “intent to return home” even if this never actually takes place. However, in some situations, a lien can be placed against the home. Also, the home is no longer exempt following the death of the nursing home resident and any spouse.
- Personal Belongings and Household Goods up to $2000 (although in practice New Jersey has not strictly enforced this requirement).
- One car is totally excluded if necessary for employment or as a means of transportation for medical treatment. Otherwise $4500 of the value of a car is excluded.
- Medical devices, wheel chairs, prosthetic devices and similar equipment unless others in the household use them as well.
- Burial spaces for applicant and his/her spouse or any other member of his/her immediate family and funds set aside for burial expenses of the applicant and his/her spouse not to exceed $1500.
- Irrevocable prepaid funeral contract.
- Cash Value of life insurance if face value is $1,500 or less. If insurance is term insurance then the entire amount is exempt regardless of the face value.
All other assets are generally non-exempt, and are countable. Basically, all money, property, and any item that can be valued and turned into cash, is a countable asset unless it is one of those assets listed above as exempt. This includes:
- Cash, savings, and checking accounts, credit union share and draft accounts
- Certificates of Deposit
- U.S. Savings Bonds
- Individual Retirement Accounts (IRA), Keogh plans, 401k and 403b accounts
- Nursing home accounts
- Prepaid funeral contracts which can be canceled
- Trusts (depending on the terms of the trust)
- Real estate (other than the residence)
- More than one car
- Boats or recreational vehicles
- Stocks, bonds, or mutual funds
- Land contracts or mortgages held on real estate sold
While the Medicaid rules themselves are complicated and tricky, it’s safe to say that a single person will qualify for Medicaid as long as he/she has only exempt assets plus a small amount of cash and/or money in the bank, up to $2000.