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LTC Bullet: Medicaid Eligibility Vise Squeezes Tighter

Monday February 8, 1999


Medicaid estate planning attorneys have fought for years to exempt Individual Retirement Accounts (IRAs) from consideration in determining asset eligibility for Medicaid nursing home benefits. According to the court decision described below, they've lost that fight in New Jersey. The evidence continues to mount that aging Americans cannot count on Medicaid, or Medicaid planners, to assure access to quality long-term care without spending down their life's savings. For those who are still young, healthy and affluent enough to obtain it, private long-term care insurance is the preferable solution.

"Certain provisions of the Medicare Catastrophic Coverage Act of 1988 ('MCCA') require a married couple to pool their resources for purposes of determining the Medicaid eligibility
of either spouse, but allow the community spouse to retain a 'resource allowance' to meet his or her own needs (in New Jersey during 1998, the community spouse can retain the greater of $16,152, or 1/2 of the couple's pooled resources up to $80,760). In addition, the community spouse may retain certain assets that are exempt from this pooled resources computation, such as the primary residence, household and personal effects, and an automobile.

"In a recent decision, the New Jersey Supreme Court interpreted certain provisions of MCCA to require an individual retirement account ('IRA') held in the name of the community spouse to be counted as an includable resource for purposes of determining the Medicaid eligibility of the institutionalized spouse. Mistrick v. Div. of Med. Assistance and Health Serv., 154 NJ 158 (1998). This decision…will increase the number of cases where a community spouse will be left with inadequate funds to provide for his or her own support…."

Source: Gary Mazart and William P. Burt, Hannoch Weisman Counsellors at Law, December 1998, published at

Undaunted by the unequivocal intent of this court decision, however, Medicaid planners Mazart and Burt think they've found some profitable loopholes: "There are several planning opportunities which would allow a married couple to remove marital assets, including retirement plan assets and IRAs, from their pooled includable resources for purposes of determining Medicaid eligibility, but which allow the community spouse to retain the benefits associated with those assets.... This case underscores the need to consult with an elder law attorney specializing in Medicaid planning such as the attorneys in [their company's] Elder and Disability Law Practice Group." In other words, the Medicaid planners are turning this court ruling against Medicaid planning abuse into an advertisement for their Medicaid estate planning services.

Readers who wish to learn more about Medicaid estate planning and long-term care financing in New Jersey may order the following report by contacting the Center for Long-Term Care Financing as indicated below:

"The Jersey Share: How to Pay for Long-Term Care with Less Federal Money, A Case Study in New Jersey," LTC, Incorporated, Seattle, Washington, 1996, 104 pages, $23.95 (hard copy), $14.95 (disk)

This study, commissioned by the New Jersey Department of Health and Senior Services, examines the state's long-term care financing crisis, explores the problem of Medicaid estate planning, and warns about the risks of making Medicaid even more attractive to the middle class by facilitating access to publicly financed home and community-based services. The report offers 46 recommendations, provides an extensive bibliography of related publications, and supplies a model state statute.