The Medicaid Income Gap and Divorce: An Injustice Remedied

By Fredrick P. Niemann, Esq. of Hanlon Niemann Wright, a Freehold, NJ Medicaid Attorney

There is troublesome phenomenon which exists in the Medicaid world which is known as the “Medicaid Gap.”  This is a term that is used to describe an income level that is just above the Medicaid cut-off yet too low to cover the cost of nursing home care.  In L.M. v. State Div. of Medical Assistance Health Services, a person applied for Medicaid benefits to cover the cost of the nursing home he was staying at.   The application was denied because his combined income from Social Security and his pension put him above the income level for eligibility.  His income was greater than the cost of private care at the nursing home. In order to get around this, L.M. and his wife, who he was married to for a period of 53 years, divorced in order to lower his income below the income cutoff.  The way this works is that by divorcing his wife, L.M.’s pension would necessarily be distributed in part to her, since she was his wife for over 50 years.  When L.M. reapplied for Medicaid benefits, the Department of Human Services decided that his full pension should be included in the income eligibility assessment process.  Once again, they denied L.M.’s application for benefits.  In short, the divorce tactic did not work either.

On appeal, the court reversed the ruling in L.M.’s favor.  Ultimately, there was a policy reason that they emphasized was the reason they reversed the lower court’s decision.  The court said, “The government and the court are equally concerned about federal and state Medicaid policies that are so restrictive that they encourage married couples, like L.M. and his wife, to seek judicial authorization to sever the bonds of a fifty-three-year-old marriage that they would otherwise preserve at all costs.”  Basically, the court is saying, the departments overseeing those who are eligible to receive Medicaid benefits should be more relaxed in applying the rules for eligibility.  Otherwise, elderly married couples will have to uproot their lives simply to be eligible for Medicaid.

To discuss your NJ Medicaid matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing consultations if you are unable to come to our office.