New Jersey Medicaid Planning

New Jersey Medicaid eligibility requirements are set forth in New Jersey Administrative Code Title 10, Chapter 71, Subchapter 3, or N.J.A.C. 10:71-3.  

United States residents who are either citizens or eligible aliens may apply for Medicaid.  For more information on what is considered an eligible alien, see our article on Medicaid residency requirements.  Applicants are generally only eligible for Medicaid in the state in which they reside.  As such, only New Jersey residents are eligible for Medicaid in New Jersey.

In addition to residency, applicants must also meet an age requirement. N.J.A.C. 10:71-3.9.  An applicant must be 65 years of age or older to be eligible based on age only.  Blind and disabled children and adults under 65 may also be eligible for Medicaid.

The following assets are usually counted in an eligibility determination:

1. Cash and bank accounts: This includes checking, savings, and money market accounts.

2. Investments: This includes stocks, bonds, mutual funds, and retirement accounts like IRAs and 401(k)s.

3. Real estate: This includes any property that is not the person’s primary residence, such as rental properties or vacation homes.

4. Vehicles: This includes any cars, trucks, or other vehicles that are not used for work or medical purposes.

5. Personal property: This includes items like jewelry, art, and antiques that have significant value.

It’s important to note that certain assets may be exempt or excluded from Medicaid eligibility calculations, such as a person’s primary residence, a certain amount of personal property, and some types of annuities. It’s also important to keep in mind that Medicaid eligibility rules can be complex and may vary by state, so it’s a good idea to consult with a Medicaid planning professional to determine what assets may be countable for Medicaid eligibility.

While it is often possible to protect some of your assets and still qualify for Medicaid, the answer ultimately depends on your particular circumstances. Generally speaking, Medicaid planning strategies can be used to legally protect a portion of assets while still meeting Medicaid’s asset and income eligibility requirements.

Some of the strategies that can be used to protect assets and still qualify for Medicaid include:

1. Asset transfers: Transferring assets to family members or into certain types of trusts can help to protect assets from being counted for Medicaid eligibility purposes.

2. Spend-downs: Spending assets on expenses that are exempt from Medicaid eligibility rules, such as home modifications or funeral expenses, can help to reduce countable assets and still qualify for Medicaid.

3. Medicaid-compliant annuities: Annuities that meet Medicaid guidelines can be used to convert countable assets into income, which can help to qualify for Medicaid while still preserving some assets.

4. Pooled income trusts: A pooled income trust can be used to protect income while still qualifying for Medicaid, and can be particularly helpful for people with disabilities.

Medicaid planning can be complex and it’s important to consult with a qualified Medicaid planning professional to determine the best strategies for your individual situation. It’s also important to ensure that any Medicaid planning strategies are legally and ethically sound, and comply with all Medicaid eligibility rules and regulations.

Medicaid spend-down is a process used to reduce countable assets and income to qualify for Medicaid benefits. Essentially, a spend-down involves spending down or reducing the amount of assets and income that are above Medicaid’s eligibility limits in order to qualify for Medicaid coverage.

In a Medicaid spend-down, a person will calculate their countable assets and income, and then spend down or use up assets or income that are above Medicaid’s eligibility limits. This can involve spending money on expenses that are exempt from Medicaid eligibility rules, such as home modifications, medical expenses, or funeral expenses.

For example, if a person has $50,000 in countable assets but the Medicaid eligibility limit in their state is $2,000 (such as New Jersey), they would need to spend down or reduce their assets by $48,000 in order to qualify for Medicaid coverage.

Medicaid spend-down can be complex, and it’s important to consult with a qualified Medicaid planning professional to determine the best strategies for your individual situation.

The Medicaid look-back period is a period of time during which Medicaid looks back at an applicant’s financial transactions to determine if any transfers of assets were made for less than fair market value. The purpose of the look-back period is to prevent people from giving away assets shortly before applying for Medicaid in order to qualify for benefits.

The look-back period is a rolling period of time that varies by state, but is generally 5 years (60 months) from the date of the Medicaid application. During this period, Medicaid will review any financial transactions, such as asset transfers or gifts, made by the applicant or their spouse to determine if they were made for less than fair market value. If any transfers were made for less than fair market value during the look-back period, a penalty period may be imposed, during which the applicant will be ineligible for Medicaid benefits.

Medicaid look-back period can be complex, and it’s important to consult with a qualified Medicaid planning professional to determine the best strategies for your individual situation.

A Medicaid compliant annuity is a type of financial product that is designed to help people qualify for Medicaid while protecting some of their assets. A Medicaid compliant annuity is purchased with assets that would otherwise count against Medicaid eligibility, and is structured to meet certain guidelines set forth by Medicaid.

Medicaid compliant annuities are typically used in Medicaid planning when an individual or couple has assets that exceed Medicaid eligibility limits. The annuity is purchased with the excess assets, and the funds are converted into a stream of income payments that are paid out over a certain period of time.

To be considered Medicaid compliant, an annuity must meet certain criteria, such as:

1. It must be irrevocable and non-assignable, meaning it cannot be canceled or transferred to another person.

2. It must be actuarially sound, meaning the payments made by the annuity must be based on the life expectancy of the annuitant.

3. It must have a term that is shorter than the life expectancy of the annuitant, meaning the annuity will not continue to pay out after the annuitant’s death.


By purchasing a Medicaid compliant annuity, a person can convert excess assets into an income stream that is not counted for Medicaid eligibility purposes, while still preserving some assets for their own use or to pass on to heirs.

It’s important to note that Medicaid compliant annuities can be complex, and it’s important to consult with a qualified Medicaid planning professional to determine the best strategies for your individual situation. Additionally, it’s important to ensure that any Medicaid planning strategies, including the use of annuities, comply with all Medicaid eligibility rules and regulations.

Transferring assets to your children in order to qualify for Medicaid is generally not a good strategy, as it can trigger a Medicaid penalty period and potentially disqualify you from receiving Medicaid benefits for a period of time.

Medicaid has a “look-back” period of 5 years (60 months), during which it reviews any financial transactions made by the applicant or their spouse to determine if they were made for less than fair market value. If any asset transfers were made during the look-back period, and Medicaid determines that they were made for less than fair market value, a penalty period may be imposed, during which the applicant will be ineligible for Medicaid benefits.

Additionally, transferring assets to your children can have other legal and financial implications, such as gift tax consequences, potential loss of control over the assets, and exposure to the children’s creditors or divorces.

It’s important to consult with a qualified Medicaid planning professional to determine the best strategies for your individual situation. There are legal and ethical ways to protect some of your assets and still qualify for Medicaid, such as the use of Medicaid-compliant annuities, special trusts, or spend-down strategies that involve using excess assets to pay for certain expenses.

Medicaid planning and estate planning are both important aspects of financial and legal planning, but they have different objectives and strategies.

Estate planning is the process of preparing for the transfer of a person’s assets and wealth to their heirs or beneficiaries after their death, while minimizing tax liabilities and maximizing the value of the estate. Estate planning involves creating wills, trusts, powers of attorney, and other legal documents that ensure the distribution of assets according to the individual’s wishes.

Medicaid planning, on the other hand, is the process of planning for the possibility of needing long-term care and qualifying for Medicaid benefits to pay for it. The goal of Medicaid planning is to protect assets from being depleted by the high cost of long-term care, while still qualifying for Medicaid benefits.

While both Medicaid planning and estate planning involve legal and financial strategies to protect assets, they have different objectives and timelines. Estate planning focuses on the transfer of assets after death, while Medicaid planning involves planning for a possible need for long-term care and qualifying for Medicaid benefits.

It’s important to consult with qualified professionals, such as an estate planning attorney and a Medicaid planning professional, to develop a comprehensive plan that addresses both estate planning and Medicaid planning goals, and ensures that all legal and financial aspects are properly addressed.