By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Medicaid Attorney
Recently a client came in to see me who received a personal injury settlement while on Medicaid. Because she is over age 65 she can’t protect the money by placing it in a special needs trust for her own benefit.
What we examine first when evaluating the subject of this post is what other Medicaid laws or regulations apply to personal injury settlement $$$. One Medicaid regulation provides that a transfer to a disabled individual is exempt from the transfer penalty rules. The person must either be deemed disabled by the State of New Jersey or by federal guidelines under the Social Security disability program.
Another option to keep Medicaid benefits is if the client has a disabled child or grandchild. If he or she does not, that leaves us with two alternatives. He/She can come off of Medicaid, spend down the proceeds and when her assets fall below $2,000 he/she can reapply. Her other choice is to give all the money to the State and remain on Medicaid uninterrupted.
Most families are not happy with this answer. “You mean give it all to the State or the nursing home? Why did I pursue the case at all if I can’t keep the money”, I’m asked.
I can’t give the family the answer they want so I tell them that coming off of Medicaid and spending down is the best option here. That’s because, while some of the proceeds must go to the nursing home or for other care costs, the spend down can be for things beneficial to him/her. We must, however, be very careful not to violate Medicaid’s other maze of laws and regulations.
Since the client never set aside money for burial this expense was one item he/she could pay for if set up in an irrevocable burial account. I discussed a laptop, television, cell phone and ipad, all permissible expenses. We also discussed medical equipment such as a special bed and wheelchair.
These items that can be purchased did not total $100,000. So, she hired us to guide her on the spend down and reapplication but the remaining amount did have to go to the nursing home to pay for care. Ultimately, she paid four months at their private pay rate, which dropped her bank account to just under $2,000. We then reapplied for Medicaid.
This client’s experience is a cautionary tale for attorneys and their clients. She should have checked with a knowledgeable elder and disability attorney to confirm the rules on Medicaid and Special Needs Trusts prior to filing her personal injury lawsuit.
For example, if the client was 64 when Melissa took the case the worth of that case dramatically drops after she turns 65. Knowing this piece of information might cause the family to push hard to settle the case before her birthday so as to fund the SNT.
On the other hand, if the value of the case is high enough, then the age 65 limitation is less important. If the case settles in the high six figure or seven figure range there are other options available to protect some of the funds.
To discuss your NJ Medicaid matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at email@example.com. Please ask us about our video conferencing consultations if you are unable to come to our office.