Significance of Payment of Debts and Expenses

Significance of Payment of Debts and Expenses

A. As indicated in the administrative regulations and the examples presented below, there are several key rules in the administrative regulations to be addressed with respect to the payment of debts and expenses and failure to consider these rules could delay the date of eligibility. The most significant administrative consideration is that the resource eligibility requirement of $2,000 (or $4,000 in limited circumstances) must be met on the first day of the month for which eligibility is sought. Relevant administrative regulations and federal statutes are included for reference.

B. Significant administrative regulations.

1. Resource eligibility is determined as of the first moment of the first day of each month - N.J.A.C. 10:71-4.1(e). The resource requirement must be met on the first day of every month for the recipient or eligibility can be lost. Of course, once eligibility is established, resources of the community spouse may exceed the Community Spouse Resource Allowance without loss of benefits by the recipient spouse – 42 U.S.C. 1396r-5(c)(4).

2. If an individual is eligible as of the first moment of the first day of the month, subsequent changes during that month in the amount of countable resources will not affect the original determination of eligibility – N.J.A.C. 10: 71-4.1(e).

3. A check drawn on the account of an applicant reduces the value of the account. However, the value of the account is not reduced by unpaid obligations for which a check has not been drawn – N.J.A.C. 10:71-4.1(e)2.

C. Eligibility can be denied or delayed by lack of compliance with the regulations.

Example 1: Applicant (single individual) has $5,000 in a checking account on September 30. There is an outstanding medical bill of $3,200. On October 1, application is made for Medicaid. Check is drawn in payment of medical bill on October 1. Application for Medicaid will be denied for October.

Note: Resources in excess of $2,000 will result in ineligibility for the month. Therefore, the nursing home is entitled to the private pay rate for that month. That is, missing the resource requirement by even a minimal amount has the same effect as missing the requirement by a larger amount.

Example 2: Same as above, except check is drawn on September 30. Medicaid will be granted.

Note: Check need not be negotiated to reduce available resources.

Example 3: Applicant has $1,500 in a checking account and qualifies for Medicaid on October 1. On October 15, individual receives a medical reimbursement check of $10,000, which is deposited in a checking account. Funds remain in the account. Medicaid recipient will lose eligibility on November 1.

Contrast: Medicaid recipient transfers the $10,000 on October 16 to a disabled child. Eligibility will be maintained.

Caution: Funds paid to the nursing home (which have not been applied against prior monthly charges) are a resource. Therefore, if one month’s deposit remains with the nursing home, the deposit should be applied to payment of nursing home costs in the month prior to eligibility.

Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.


© February 2009, Post #4