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New Jersey Law Allows for "Medicaid Divorce"

Under New Jersey law, a married couple may divorce and transfer at least half of the marital assets to one spouse in order to let the other spouse qualify for Medicaid to pay for nursing home care.

This arrangement is called a "Medicaid Divorce." But it's not the only way to protect marital assets.

Medicaid eligibility is based on a couple's total income and assets. The total assets are divided in two. The spouse who will remain in the community (i.e., not in a nursing home) is called the "community spouse."

The Medicare Catastrophic Act of 1988 was designed to help married couples with significant assets when one spouse requires nursing home care and Medicaid assistance. The Act prevents the spouse who doesn't require such care from being impoverished as a result.

The community spouse is allowed to keep half the couple's assets up to $115,920. The remaining funds have to be spent down on the other spouse's nursing home care until only $2,009 in assets remains.

If a spouse is named as a beneficiary on a retirement account, the community spouse may be able to remove the other spouse as a beneficiary. Otherwise, the funds in the retirement account would have to go to the nursing home or would make the institutionalized spouse ineligible for Medicaid.

"Medicaid Divorce" is a more radical alternative for preserving assets for the non-institutionalized spouse. Going through a divorce, especially for a long-married and loving couple, may be traumatic. Of course, couples may have religious or ethical reasons why divorce is simply not acceptable to them.

Any couple considering a medical divorce should consult an experienced family law attorney. Each party should be represented by his or her own attorney, especially where one spouse has diminished capacity to make financial and other decisions.

If you or a family member is considering a Medicaid Divorce, consult an experienced family law attorney at the New Jersey Law Offices of Greenberg, Walden & Grossman, LLC.

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