NJ Medicaid Announces the Official End of the Medically-Needy Program; Long live the New Managed Long Term Services and Supports Program

By notice contained in Medicaid Communication 14 – 15 issued on December 19, 2014, the State of New Jersey formally announced the official end of the Medicaid Medically-Needy program. Medically-Needy Medicaid no longer accepted applications after November 30, 2014. Beginning on December 1, 2014, individuals seeking Medicaid to pay nursing home costs as well as home and community-based services including assisted living facility costs must apply for eligibility under a new Medicaid program, entitled “Managed Long Term Services and Supports” (MLTSS).

MLTSS refers to the delivery of long-term care services and supports through managed care organizations. In MLTSS arrangements, service providers receive capitated, or fixed, payments for long-term care services and are accountable for insuring the delivery of services and supports that meet quality standards. Through the new MLTSS program, New Jersey will expand Medicaid eligibility and coverage options for people who need home and community-based services but previously were not eligible for Medicaid due to excess income. Applicants with income exceeding the “income cap” in the year of application now will be able to attain Medicaid eligibility under MLTSS by transferring excess income each month to a special type of trust called a Qualified Income Trust (QIT). Excess income placed in a QIT will not disqualify an individual applying for Medicaid benefits. The “income cap” for a single person is $2,163 per month in 2014, and for a couple is $4,326 per month in 2014. All other program eligibility requirements, such as resource limits, medical requirements, transfer of asset rules, and residency rules, also must be met by applicants.

Medicaid Communication No. 14 – 15 establishes a number of requirements for QITs. Only the Medicaid beneficiary, the beneficiary’s legal guardian or power of attorney can establish a QIT. All QITs must be irrevocable. Only income received by the Medicaid applicant may be deposited into a QIT. Income from an applicant’s spouse or from any other person cannot be transferred to a QIT. Income received by the Medicaid applicant such as Social Security benefits, pension, rental income and the like must be deposited into a QIT in the month that the income is received. All income from any single source must be transferred to a QIT. For example, the applicant cannot direct only half of his or her pension benefits or Social Security check into the QIT. Resources such as cash, proceeds from the sale of real estate, savings and investment accounts and the like cannot be transferred to a QIT.

Income deposited into a QIT can be used only to pay for certain expenses approved by federal regulations. Approved expenses include the Medicaid applicant’s share of the cost of facility care or home health care, prescriptions, over-the-counter drugs other approved medical expenses, the applicant’s personal needs allowance, a spousal monthly maintenance allowance, and health insurance premiums. Trustees may be paid commissions of up to 6% of the income deposited into the QIT each month if income remains in the QIT after all approved expenses are paid. If a balance remains in the QIT after the payment of all of the above-mentioned expenses, the balance must remain in the QIT during the applicant’s life, and the applicant may be subject to “transfer of asset” penalties at the yearly redetermination process if income is transferred out of a QIT. Upon the death of the Medicaid recipient, the State of New Jersey must be the first beneficiary of all funds remaining in the QIT up to the amount paid by Medicaid for the recipient’s care.

QITs may be established for a Medicaid applicant by a lawyer, or the applicant may use the QIT template posted on the Division of Medical Assistance and Health services website.

Under MLTSS, the number of New Jersey residents who can receive assistance through Medicaid will increase. This is a positive development for the elderly and disabled in New Jersehe y who need long-term care services.

Medicaid Communication No. 14-15 is attached here – Medcomm 14-15 Qualified Income Trusts

For readers interested in learning more about new Medicaid MLTSS program or QITs, previous articles about theses topics were posted to this blog here and here.

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