No, not always. The five (5) years is simply a look back. If transfers occurred more than the five (5) years look back, there is no penalty. If transfers occurred during the five (5) year look back, there is a penalty. In most instances, the penalty is significantly shorter than five (5) years.
Is it too late to do Medicaid Planning if someone is close to being admitted or is already in a nursing home?
No. Medicaid Planning can be done even after someone has already entered a nursing home.
Under Medicaid is it alright to transfer $13,000 to each family member every year? My accountant says the IRS allows it.
No, it’s not okay. The $14,000+ per year gifting limit is part of the federal gift tax law, not the Medicaid law. Medicaid does not permit gifts and/or any transfers within the 5 year look back period without them being subject to a penalty. On the other hand, if a gift(s) exceeds $14,000 per person, per year, this does not generally trigger any payment whatsoever of gift tax.
It simply means that a gift tax return may have to be filed. Beginning in January 2013, a person can gift $5,000,000+ (indexed for inflation) during his or her lifetime or on death in addition to the $14,000 per person per year without paying any Federal estate or gift tax.
Actual Client Testimonials
I knew I needed an attorney, but could I afford one? Would he or she be experienced and someone I could trust and talk to openly and in confidence?
I was referred to Fredrick P. Niemann. I was warmly greeted and my appointment promptly kept. I was given all the time I needed to ask questions and talk about my needs and concerns. I was quoted a fee that was appropriate and reasonable for my matter. My attorney gave me answers and advice. He was a counselor at law and in life. Calling Mr. Niemann was the right decision.
—Nick Alfano, Morganville, NJ
I didn’t know who to turn to for legal advice. There are so many lawyers, but who was the right one for me? I wanted someone who would listen to me and someone I could afford. I knew I couldn’t afford to be without an attorney and then I remembered an old cliché… ”you get what you pay for”. But there can be a difference between high price and high value. With Fred, I got a terrific attorney who really worked with me. He was with me every step of the way. His fees were fair and our interpersonal relationship great. I would recommend Fred Niemann to anyone who wants a caring attorney.
—Josephine Pysniak, Woodbridge, NJ
Does the person receiving the gift for Medicaid Planning purposes have to pay income taxes on the gift?
No. A gift is not taxable income. The person receiving the gift does not declare the gift on their 1040 tax return. However, if the person receiving the gift invests the gift, they must report the investment income from the gift on their 1040.
Are there any income tax issues to be considered in Medicaid Planning?
Yes. If a person withdraws money from an IRA, it is taxable income. If a person liquidates certain Bonds, it is taxable income. If a person liquidates H Bonds, which have been converted from E or EE Bonds, it generates taxable income. If a person withdraws money from an annuity, a portion of the withdrawal is taxable income. If a person assigns an annuity, it triggers immediate income tax on the deferred income. These are a few of the many examples of events which trigger income tax. Carryover basis, step up in basis and tax on sale of home are some of the others. Good Medicaid Planning incorporates good tax planning.
Can trusts be used for Medicaid asset transfer purposes?
Yes. The Federal Government has approved the use of certain types of trusts for Medicaid Planning purposes.
Is it true that a home is not counted for Medicaid eligibility purposes?
In some cases, a home is not counted as an asset for Medicaid eligibility purposes. However, for a single person it is not exempt. The home must always be considered in Medicaid Planning. Even if it is not counted as an asset for Medicaid eligibility purposes, New Jersey will file a lien on the home upon the Medicaid applicant’s death, under certain circumstances.
Is there a way I can transfer my home to my children but insure that I can live there for the rest of my life?
Yes. There is a technique known as a life estate or use and occupancy agreement. Under a life estate, or a right or use and occupancy, the parent transfers a remainder interest in the home to the children but reserves the right to live there for the rest of the parent’s life. The children cannot sell the home out from under the parent or mortgage it without the parent’s consent.
Is an annuity a good Medicaid Planning technique?
Under current New Jersey law, purchasing a qualifying Medicaid annuity may be treated as an exempt transfer of assets if properly structured. Using an annuity may but may not be a good Medicaid Planning technique. Contact Fredrick P. Niemann, Esq. at email@example.com or toll-free at (855) 376-5291 for the latest update on this issue.
Is it important to have my legal documents reviewed as part of Medicaid Asset Protection Planning?
Yes. It is always important to review Wills, Living Wills and Powers of Attorney. These documents are usually not designed for situations in which a family member will be applying for Medicaid. For example, if there is a husband and wife and the husband is entering the nursing home, the wife’s Will usually leaves her assets to the husband. This needs to be changed. It’s potentially fatal!
Where are Medicaid Applications Filed?
In New Jersey Medicaid Applications are filed at the County Board of Social Services. Some counties maintain outreach offices at satellite locations, otherwise the application must be filed at the central county office.
May applications be filed by mail?
New Jersey Medicaid applications may not be filed by mail.
What type of documents are required in connection with an application?
Required documentation begins with a birth certificate for the applicant, a marriage certificate if the applicant is or has been married and a death certificate of the spouse or divorce decree if the marriage has been dissolved by death or divorce. In addition, five years of complete financial records may be required as well as all the documents itemized on the application form. Many other documents are required as part of the review process and are identified in the application.
What if I am unable to locate a birth certificate, marriage certificate, death certificate or divorce decree?
All of these items can be obtained from the Registrar of Vital Statistics or from court records. If it is absolutely impossible to obtain these records, other forms of evidence may be accepted.
How does the applicant prove that it is medically necessary that he be receiving the care being provided?
A PAS is a medical evaluation of the applicant. A PAS is ordered by the facility. Medicaid sends a nurse to examine the applicant to determine whether or not the care is medically necessary. The applicant or the applicant’s representative must be sure that the facility orders the PAS. New Jersey has an unwritten rule that the examination will take place within 30 days from the date the PAS is ordered.
How does Medicaid know that the information I am providing is complete?
Medicaid has a computer match with the I.R. S. Medicaid will receive information concerning 1099′s sent by all financial institutions.
How long does it take to process a Medicaid Application?
The length of time necessary to process a Medicaid Application varies from county to county and is dependent on the nature of the financial data being submitted. In some counties, an application can be approved within 45 – 60 day. In other counties, it takes 6 months or more to a year. In special situations, the application has to be approved in Trenton and this can take 18 months or longer.
Who pays the nursing home while the Medicaid Application is pending?
At the time of approval of the Medicaid Application, Medicaid will inform the applicant of his/her applicant’s monthly share of long-term care costs. The applicant must pay this share to the facility while the application is pending. When the application is approved, Medicaid will pay the nursing home the balance due and owing retroactively to the date of eligibility.
In New Jersey, is the Medicaid Application process time consuming?
Medicaid demands proof of every financial transaction going back 5 years prior to the filing of the application. Accurate records should be gathered and a complete Medicaid application furnished to the County Board of Social Services to make the processing simpler. If records are inaccurate or incomplete or if a Medicaid application package is disorganized, the Medicaid Agency will continue to insist on additional information and the application will be delayed indefinitely. Submission of a complete Medicaid Application requires many hours of time. It is estimated that a professional assembling a Medicaid Application spends approximately 25-40 dedicated and undisturbed hours assembling and organizing the information. A person unfamiliar with the process will spend many times that amount of time.
Is the cost of paying a professional such as a law firm to prepare and file a Medicaid Application in New Jersey a legitimate spend down for Medicaid eligibility purposes?
Yes. The cost of professional assistance in preparing and filing a Medicaid Application is paid by the Medicaid applicant as part of the spend down process. The legal fee paid to our office, for example, is credited toward the applicant’s eligibility.
Contact Fredrick P. Niemann, Esq. on any questions concerning eligibility for NJ Medicaid or applying for Medicaid approval.
Call toll-free (855) 376-5291 or email him at
You can meet with Fred to get all the answers you need about NJ Medicaid.
Some people who are enrolled in New Jersey Medicaid or NJ FamilyCare “Plan A” also have or are covered by private health or other insurance. If this describes your situation, it is important for you to understand how these different types of coverage work together, and what your legal obligations are to the Medicaid or NJ FamilyCare program.
This section of the page is intended to help explain your responsibilities to Medicaid or NJ FamilyCare if you have other insurance, and to answer questions about how to make the best use of all your coverage.
This section of the page also will answer questions about what you should do if you receive a legal settlement or insurance claim as the result of an accident or injury caused by someone else.
Please take a few minutes to read it carefully.
1. What is New Jersey Medicaid and what is NJ FamilyCare?
New Jersey Medicaid and NJ. FamilyCare are both health care programs paid for by federal and state funds. ‘A person’s eligibility for either of these- programs is based on income and other information. Both programs pay certain medical and health care costs.
Both programs are administered by the New Jersey Division of Medical Assistance and Health Services (DMAHS). Neither Medicaid nor NJ FamilyCare should be confused with Medicare, which is administered by the federal government only.
In this brochure, both Medicaid and those NJ FamilyCare services paid for by Medicaid are referred to as “Medicaid.”
2. What is private health insurance?
Private health insurance is any individual or group health insurance or health care plan that you pay for or that is provided through an employer, union, absent parent, or military or other organization. Like Medicaid, private health insurance pays all or part of the medical, vision, prescription, dental or other health care bills for you and/or your family.
Also, like Medicaid, private health insurance is often provided through an HMO.
3. Can I qualify for Medicaid if I have private health insurance?
Yes, you may qualify, regardless of other health insurance you may have.
In addition, if you do not have private health insurance but it is available to you, for example through an employer, Medicaid may require you to apply for it.
4. Why should l tell Medicaid if I have private health insurance?
Federal and state laws require you to report your private health insurance coverage to your eligibility caseworker. In most cases, federal and state law also requires you to use your private health insurance to pay for health care before using Medicaid.
5. What should I do to make sure that my private insurance and Medicaid work together?
Whenever you choose a health care provider, you should make sure that he or she accepts both your private health insurance and Medicaid. When you visit your health care provider, you should provide both your Medicaid identification card and your private health insurance information.
If the service you receive is covered by both your private health insurance and by Medicaid, Medicaid may pay a portion of the bill that is not paid by your private health insurance company. Generally, your .health care provider must bill your private insurance company first. The provider may only bill Medicaid for any amount that is not paid by your private health insurance, and if Medicaid does pay anything, it will only pay up to a certain amount.
It is important to remember that if you receive services from a health care provider who does not accept Medicaid, Medicaid will not cover any portion of your bill.
6. What if I have co-pays or deductibles with my private health insurance?
If the co-payments or deductibles under your private health insurance plan are for services that are covered by Medicaid, the Medicaid program may pay some or all of them. Your health care provider must bill your private health insurance company first for the services he has provided. Then, Medicaid can be billed for the co-payment and/or deductible. Again, if Medicaid then pays anything, it will only pay up to a certain amount.
7. Will Medicaid ever pay the premiums for my private health insurance?
Premiums for a private health insurance plan are your responsibility. Sometimes: however, Medicaid may decide that it is cost-effective to pay your premiums. An example might be if you have a medical condition that requires costly care that is covered by your private health insurance.
If you are eligible for, or are currently enrolled in, a job-related health plan, then you may be eligible for the Premium Support Program (PSP). If you or a member of your family have costly medical expenses and have access either to a job-related or individual insurance plan, then you may be eligible for the Payment of Premium (POP) program. If you are interested in learning more about either PSP or POP, contact the DMAHS Hotline at 1-800-356-1561.
8. What if my private health insurance changes? Can I still qualify for Medicaid?
You must report any changes in your health insurance coverage to your eligibility caseworker. This includes any changes in insurance companies or changes in what your insurance covers.
This requirement also applies to any health insurance carried by someone other than yourself who provides health insurance coverage for you and/or your family.
9. What if I am no longer covered by private health insurance?
If your private coverage stops, give your eligibility caseworker proof of termination. Proof may be:
• A letter from your health plan showing the date the coverage ended.
• A letter from your employer showing the date coverage was terminated.
• A signed affidavit.
10. What if I am injured by someone else and I receive a financial settlement? Will Medicaid take the money?
Generally, yes. If you are injured and there is a possibility that you may receive a financial settlement or a payment from someone else’s insurance company as a result, you are responsible for providing this information to your eligibility caseworker. If you receive Medicaid through an HMO, you also are responsible for providing this information to the HMO.
If you receive a financial settlement or insurance payment as a result of an injury or accident, you are required to use this money to repay Medicaid for any related services that it has already covered. As a result of this settlement, you might also lose your Medicaid eligibility.
If you fail to repay Medicaid, or if you do not cooperate in establishing another person’s or company’s liability for your expenses, you can lose your Medicaid coverage and face both criminal and civil penalties.
11. What if my attorney or other legal representative plans to take legal action on my behalf, or actually gets a settlement or judgment for me?
You or your attorney or other legal representative are required by law to notify DMAHS’s Bureau of Administrative Action and Recoveries (BAAR) in writing if a lawsuit or Worker’s Compensation claim is filed on your behalf, and also when a settlement or recovery is received on your behalf. Both written notices must be sent to the Bureau of Administrative Action and Recoveries, P.O. Box 712, Unit 6, Trenton, NJ 08625.
You and your attorney or other legal representative are also responsible for making sure that any money received as the result of a legal action or Worker’s Compensation claim is first used to immediately repay DMAHS for any Medicaid or NJ FamilyCare payments made in relation to the incidents that led to the legal action or claim. The remainder of the settlement can be paid to you only after these expenses have been reimbursed. Also, all settlements must be reported to the agency that /determined your eligibility.
12. What if my attorney advises me to put my settlement into a Special Needs Trust?
If you receive a settlement of any kind, you must first use it to repay Medicaid for any bills it has paid for health care services related to your injury. Any money that remains can only be placed in a Special Needs Trust if you have the approval of the County Board of Social Services or of the Social Security Office, depending on which agency determines your eligibility for Medicaid. For more information on the use of Special Needs Trusts and qualifying for NJ Medicaid, please see www.specialneedstrustattorney.com
13. A checklist review: What are my responsibilities under NJ Medicaid law?
• To tell your eligibility caseworker if you have any type of insurance, and to report any changes in your private insurance to your caseworker;
• To make sure that your health care- providers accept Medicaid as well as your private health insurance;
• To make sure that you show your health care providers both your private health insurance information and your current Medicaid Beneficiary ID card each time you receive medical treatment or other health care services;
• To tell your eligibility caseworker, and your Medicaid HMO, if you are enrolled in one, of any health care services you receive as the result of an accident or injury caused by someone else, including a motor vehicle accident;
• To report to your eligibility caseworker about any money that you receive as the result of an accident or injury, and to use any money you receive from a legal settlement or insurance claim as the result of an injury to repay Medicaid, if it has already paid for services related to the injury;
• To notify, or have your attorney or other legal representative notify, BAAR in writing if a lawsuit or other claim is filed on your behalf, and also when a settlement or recovery is received on your behalf. Both written notices must be mailed to the Bureau of Administrative Action and Recoveries, P.O. Box 712, Unit 6, Trenton, NJ 08625.
• To enroll in a group health insurance plan if Medicaid asks you to do so.
The New Jersey Medicaid and NJ FamilyCare programs help to protect your health and that of your family. As a beneficiary, you also are responsible for helping to protect these programs. By following the guidelines provided in this brochure, you will help make sure that both New Jersey Medicaid and NJ FamilyCare continue to be able to help you and your family stay healthy.
If you have additional questions about New Jersey Medicaid or NJ FamilyCare, please call 1-800-356-1561. If you call that number and have any questions about your health insurance, ask to speak with someone in the Bureau of Third Party Liability. If you have any questions about your insurance that covers accidents and injuries; auto, homeowners or workers compensation claims or lawsuits that you have filed; or Special Needs Trusts, ask for the Bureau of Administrative Action and Recoveries.