New Jersey residents with higher incomes may soon have new options for long term care.

New Jersey Medicaid announced it intends to clear the way for Miller trusts.  NJ Medicaid will request approval from the federal government to discontinue its Medically Needy program for long term care.  This would allow Medicaid applicants who seek long term care to begin using Qualified Income Trusts, or “Miller” Trusts (named after Miller v. Ibarra, 746 F. Supp. 19 (D. Colo. 1990)).

A Miller Trust is a legal arrangement in which the Medicaid applicant directs income in excess of the Medicaid limit to an irrevocable trust, which uses trust assets to pay the applicant’s long term care costs.

Practically, this decision affects people with incomes above the Medicaid limit, which in 2014 is $2,163.  Currently for these folks, Medicaid only pays for long term care in a nursing home, limiting options.  Healthier people who could have received care in an assisted living facility or at home, instead must enter a nursing home or forego long term care.  But we expect that with Miller Trusts, people with higher incomes (such as from Social Security or a pension) will be able to receive Medicaid in these settings.

Federal law (42 USC 1396p(d)(4)(B)) prohibits the use of Miller Trusts in states that have a Medically Needy program, which is why New Jersey is seeking to discontinue Medically Needy institutional Medicaid.  Notably, Medicaid has not proposed discontinuing Medically Needy Medicaid for people receiving non-institutional or “community” Medicaid – i.e., people in the community who use Medicaid for acute care, such as doctor and hospital visits.  The proposal only affects Medicaid applicants who need long term care.

We expect that when Miller Trusts are implemented in New Jersey, FriedmanLaw will have a powerful new tool to help our clients obtain long term care in the most comfortable and appropriate setting.

For more information on Medicaid, long term care planning, protecting assets or other elder law issues, please see our Practice Areas and Q&A pages, call us at (908) 704-1900, or email at LAF@SpecialNeedsNJ.com.