People with severe, chronic disabilities that are manifest by age 22 and substantially limit at least three kinds of major life activities are developmentally disabled and potentially eligible for services from the New Jersey Department of Human Services Division of Developmental Disabilities (“DDD”). For many families, the most important DDD benefit is residential housing aid (“Residential Services”). Without DDD assistance, few people with developmental disabilities could afford a group home or even a semi-independent household.
Newly issued DDD regulations now require people with developmental disabilities to qualify for Medicaid or forfeit Residential Services. To obtain Medicaid, an individual must be aged, blind, or disabled and meet financial requirements. Because resource and income caps are quite low for most Medicaid programs, wages or Social Security Disability benefits often push people with developmental disabilities over regular Medicaid financial limits.
Medicaid financial rules are too complex to address in detail in a short article. However, most income and resources are Medicaid countable if they can be used to satisfy an applicant’s needs for food and shelter. Thus, cash, food or shelter provided in-kind, and valuables that can be liquidated to cash quickly are Medicaid countable unless eligible for very limited statutory exemptions.
There is some question whether DDD may deny Residential Services simply because an applicant can’t qualify for Medicaid. However, that rarely should be an issue because DDD Residential Services clients usually can get Medicaid through DDD’s Community Care Waiver (“CCW”) even if finances exceed regular Medicaid limits.
While CCW uses enhanced income and asset limits, they still are rather modest. Therefore, many people with developmental disabilities will need Medicaid planning to maintain eligibility. Planning may involve a Medicaid payback special needs trust (“SNT”) that complies with complex federal and state rules as well as other Medicaid “spend down” techniques. Some situations call for a new SNT while others cry out to convert a non-qualifying trust to an SNT. With so much at stake though, experienced special needs counsel should assist with SNT formation to avoid the minefield of traps for the unwary. In some cases, a court application may be essential for Medicaid planning and/or to establish a qualifying Medicaid payback trust.
Families may benefit over time if an infusion of federal Medicaid money leads New Jersey to augment current services for people with developmental disabilities. Nevertheless, in the near term, people with developmental disabilities must scramble to comply with the new DDD Medicaid requirement. Fortunately, CCW should allow must people with developmental disabilities to obtain Medicaid, but they may require Medicaid planning to qualify. Expert advice on CCW, Medicaid, and special needs planning is available from FriedmanLaw.
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