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Medicaid Divorce

If either you or your spouse is facing a long-term serious illness or disability, you probably have a multitude of concerns. Serious health issues are one of the most difficult challenges anyone can face. Mounting health care costs can add worries about the well spouse being left impoverished or children being left without resources. Becoming eligible for Medicaid assistance might help alleviate some of these concerns, but Medicaid eligibility is based on strict criteria that many married couples are not able to meet. In some cases, even happily married spouses consider divorce as a possible tool to help manage the financial burden of a serious health crisis.

What is Medicaid?

Medicaid is a federal needs-based health care program administered by the states. Eligibility is based on income and available financial resources. Individuals who are over 65, or are blind or disabled, and have income or resources too high to qualify for regular Medicaid, may qualify for limited health coverage as "medically needy" individuals, and in some cases this coverage will include the cost of placement in a long-term care facility. The medically needy program includes a "spend down" provision that allows income to be reduced by documented medical expenses in calculating eligibility requirements. 

More information on Medicaid eligibility is available from your local New Jersey County Boards of Social Services office. Although the requirements are complicated and differ based on individual circumstances, the income and resources of both spouses isalways included in determining eligibility for married persons.

Financial Preservation and Medicaid Eligibility

If long-term care is a possibility for either you or your spouse, you may be concerned about protecting assets for the use of family members, particularly if you have younger children. A couple cannot meet Medicaid eligibility requirements for an ill spouse simply by transferring away assets for less than fair market value, as the Medicaid eligibility determination includes a "look back" over a certain period of time prior to an application, and there may be a penalty period of ineligibility if any such transfers were made during this time. Other options are available that may allow a couple to preserve assets acquired during marriage and still allow an ill spouse to become Medicaid eligible. One of these options is restructuring assets by way of divorce.

Divorce as a Medicaid Planning Tool

State laws differ both with respect to the handling of Medicaid assistance in general and with respect to the treatment of divorce as a tool for Medicaid eligibility. If you are considering divorce to allow a disabled spouse to become eligible for Medicaid, it is very important to consult with an attorney who is familiar with the laws of your state.

Current New Jersey law permits a couple to transfer assets to a well spouse for purposes of establishing Medicaid eligibility only incident to the entry of a court order by a Family Part Judge. A Family Part order transferring one spouse's income or assets to the other spouse will supersede the Medicaid regulations requiring consideration of spousal resources in determining Medicaid eligibility. This is sometimes referred to as a "Medicaid Divorce," as couples choosing this process may be very happily married but faced with no choice other than to divorce or face financial disaster. 

If you are considering this option, proceed with great caution and only with attorney assistance. There are many factors involved, including the possibility that the ill spouse's needs may not allow equitable property distribution and payment of alimony to be based on the standard of living enjoyed during the marriage. Sometimes a "Special Needs Trust" will need to be established and funded to preserve assets received by an ill spouse in the equitable distribution. There may be additional financial considerations as well; including whether or not the divorce would impact other benefits one or both spouses may be eligible for, including future benefits such as social security.

There is no guarantee that a judge will order the division of property in accordance with a spousal agreement, nor is there a guarantee that Medicaid won't assess a penalty. Medicaid will scrutinize the distribution for fairness to the ill spouse. Capable and highly skilled attorney assistance can maximize the chances of a beneficial outcome for everyone.

Collaborative Process

Although spouses considering Medicaid Divorce commonly consult an attorney together, the process is best handled with separate attorneys for each spouse. This is especially true where one spouse has diminished capacity or anticipates having diminished capacity in the future. Even where both spouses are fully capable of understanding everything involved in the proceeding, separate attorneys should be engaged due to the possibility that the agreement will appear to be financially unbalanced in favor of the well-spouse. If the ill spouse obtains representation from an elder law or disability law attorney, the process may be conducted as a collaborative venture outside of court while still ensuring that the interests of both spouses are fully protected.

If you and your spouse are wondering if a Medicaid Divorce might help your family, you may have to sort through some very mixed and complex emotions. The attorneys at Weinberger Law Group can provide you with the information needed and will help answer all of your questions. If you believe that a collaborative process might fit your needs, we can help you explore this possibility. Contact us today for a free initial consultation.

New Jersey County Boards of Social Services

     
Counties Hours Phone
     
Atlantic County 8:30-4:30 609-348-3001
1333 Atlantic Avenue    
Atlantic City, NJ 08401    
     
Bergen County 8:15-4:15 201-368-4200
216 Route 17 North    
17 Park Office Center, Bldg. 8    
Rochelle Park, NJ 07662    
     
Burlington County 8:00-4:30 609-261-1000
Human Service Facility    
795 Woodlane Road    
Mount Holly, NJ 08060    
     
Camden County 8:30-4:30 856-225-8800
County Administration Bldg.    
600 Market Street    
Camden, NJ 08102    
     
Cape May County 8:30-4:30 609-886-6200
Social Services Bldg.    
4005 Route 9 South    
Rio Grande, NJ 08242    
     
Cumberland County 8:30-4:30 856-691-4600
275 North Delsea Drive    
Vineland, NJ 08360    
     
Essex County 8:30-4:30 973-733-3000
Division of Welfare    
18 Rector Street, 9th Floor    
Newark, NJ 07102    
     
Gloucester County 8:00-4:00 856-582-9200
400 Hollydell Drive    
Sewell, NJ 08080    
     
Hudson County 8:30-4:30 201-420-3000
257 Cornelison Ave.    
Jersey City, NJ 07302    
     
Hunterdon County 8:30-4:30 908-788-1300
Community Services Center    
6 Gauntt Place    
P.O. Box 2900    
Flemington, NJ 08822    
     
Mercer County 8:30-4:30 609-989-4320
200 Wolverton Street    
Trenton, NJ 08650    
     
Middlesex County 8:30-4:15 732-745-3500
181 How Lane    
P.O. Box 509    
New Brunswick, NJ 08903    
     
Monmouth County 8:30-4:30 732-431-6000
Kozloski Road    
P.O. Box 3000    
Freehold, NJ 07728    
     
Morris County 8:30-4:30 973-326-7800
Office of Temporary Assistance    
340 West Hanover (Morris Township)    
P.O. Box 900    
Morristown, NJ 07963    
     
Ocean County 8:30-4:30 732-349-1500
1027 Hooper Avenue    
P.O. Box 547    
Toms River, NJ 08757    
     
Passaic County 8:30-4:30 973-881-0100
80 Hamilton Street    
Paterson, NJ 07505    
     
Salem County 8:30-4:00 856-299-7200
147 S. Virginia Avenue    
Penns Grove, NJ 08069    
     
Somerset County 8:15-6:00 908-526-8800
73 E. High Street    
P.O. Box 936    
Somerville, NJ 08876    
     
Sussex County 8:30-4:30 973-383-3600
83 Spring Street Suite 203    
P.O. Box 218    
Newton, NJ 07860    
     
Union County 8:30-4:30 908-965-2700
342 Westminster Avenue    
Elizabeth, NJ 07208    
     
Warren County 8:30-4:30 908-475-6301
Court House Annex    
501 Second Street    
Belvidere, NJ 07823    
Considering a New Jersey medicaid divorce?
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