Long-term-care planning starts with the care that is needed now.

The Number That Changes Everything

One hundred thirty thousand dollars. That is the approximate annual cost of nursing home care in New Jersey -- one of the highest in the nation. Assisted living runs $7,000 to $10,000 per month. Memory care facilities charge $8,000 to $12,000. These are not luxury facilities. These are the standard costs of standard care. For a married couple where one spouse needs nursing home care, the math is devastating: three to four years of care can consume $400,000 to $500,000 -- the value of a typical New Jersey family's entire retirement savings plus the equity in their home.

Medicare -- the health insurance most people assume will cover them -- does not pay for long-term custodial care. Medicare covers only short-term skilled nursing rehabilitation (up to 100 days, and only after a qualifying hospital stay). Once you need ongoing assistance with daily activities -- bathing, dressing, eating, transferring -- Medicare stops paying. At that point, you either pay out of pocket or you qualify for Medicaid.

Medicaid planning is the legal process of reviewing assets, income, transfers, exempt-resource rules, and care needs before or during a long-term-care event. In some matters, planning may preserve more family resources than an unplanned spend-down; in others, the rules leave fewer options. Contact counsel as soon as long-term care becomes a concern, because Medicaid's transfer rules can penalize last-minute transfers.

How Medicaid Long-Term Care Works in New Jersey

New Jersey's Medicaid program -- administered by the Division of Medical Assistance and Health Services (DMAHS) within the NJ Department of Human Services -- covers nursing home care, certain home and community-based services, and assisted living through the MLTSS (Managed Long Term Services and Supports) program. The program is governed by federal law (42 U.S.C. § 1396 et seq.1) and implemented through NJ regulations (N.J.A.C. 10:712). To qualify, you must meet both medical and financial criteria.

Medical Eligibility

You must require a "nursing facility level of care" -- meaning you need assistance with activities of daily living (ADLs) such as bathing, dressing, toileting, transferring, and eating, or you have a cognitive impairment that requires supervision. A clinical assessment determines medical eligibility.

Financial Eligibility

Financial eligibility has two components -- asset limits and income limits:

The Five-Year Lookback

This is the most important rule in Medicaid planning -- and the one that makes timing critical.

Under federal law (42 U.S.C. § 1396p(c)1), when you apply for Medicaid long-term care, the state reviews every financial transaction you made during the previous 60 months (five years) -- a lookback period established by the Deficit Reduction Act of 2005 (DRA 2005), which extended the prior 36-month window. In New Jersey, DMAHS implements this through N.J.A.C. 10:71-4.102. Transfers of assets for less than fair market value -- gifts to children, transfers to trusts, charitable donations, adding someone to a deed, paying a grandchild's tuition directly -- can trigger a penalty period. During the penalty period, Medicaid may not pay for your care, even though you have already given away the assets and can no longer use them to pay privately.

The penalty period is calculated by dividing the total value of transferred assets by New Jersey's current daily penalty divisor. For cases received on or after April 1, 2026, DMAHS Medicaid Communication 26-043 set that divisor at $420.67 per day. A $140,000 uncompensated transfer creates roughly 332 ineligible days; a $280,000 transfer creates roughly 665 ineligible days. The exact calculation belongs in the Medicaid application file and should be checked against the DMAHS communication in effect on the filing date.

The takeaway: Contact counsel immediately when long-term care is foreseeable. Planning more than five years before a Medicaid application generally creates more options, but crisis planning may still preserve value even when care is already needed.

Medicaid Planning Strategies

The right strategy depends almost entirely on timing -- how far you are from needing care, and whether the five-year lookback has already closed on the assets you want to protect. The families this page is written for are usually somewhere in the middle: a home, a retirement account, and combined savings in the $300,000-to-$800,000 range. For that profile, a properly structured irrevocable trust is frequently the central tool rather than an optional add-on, because it may move the home and other assets outside Medicaid countability while still leaving you the right to live there. Wills, powers of attorney, and beneficiary designations remain necessary, but they do not address long-term-care cost on their own. The strategies below are grouped by how much runway you have.

Advance Planning (5+ Years Before Need)

• Irrevocable Medicaid asset protection trust: Transfer your home and other assets into an irrevocable trust in which you are not a beneficiary of the principal. Once the assets have sat in a properly structured trust beyond the five-year lookback, they are generally treated as outside Medicaid countability, and the trust can be drafted so that you keep the right to live in the home for life. This is usually the most protective of the advance strategies because it may reduce both asset-count and estate-recovery exposure, depending on title, retained rights, survivor protections, trust terms, benefit history, and state review.
• Gifting strategy: Transfer assets to children or other family members in a structured program, completing all transfers at least five years before anticipated need.
• Long-term care insurance: Purchase a policy (or a hybrid life/LTC policy) that covers a portion of care costs, reducing the amount of assets at risk.
• Life estate deed: Transfer your home to your children while retaining the right to live there for life. After the five-year lookback, the home is no longer yours for Medicaid purposes -- but estate recovery may still apply.

Crisis Planning (At Time of Need)

Even if you did not plan in advance, strategies exist -- though they are more limited and more complex:

• Medicaid-compliant annuity: Convert countable assets into an income stream using an annuity that meets Medicaid's requirements (irrevocable, non-assignable, actuarially sound, with NJ Medicaid named as remainder beneficiary). This converts a countable asset into an exempt income stream.
• Spousal refusal: In narrow circumstances, a community spouse may decline to make their assets available for the institutionalized spouse's care, which can shift the cost to Medicaid and leave the state with a reimbursement claim against the refusing spouse. Because that reimbursement exposure can be significant, this strategy is used selectively and only after the risk is analyzed in detail.
• Caregiver child exception: Where an adult child lived in the parent's home and provided care that demonstrably delayed the parent's need for nursing home placement for at least two years, the home may be transferred to that child without triggering a transfer penalty under 42 U.S.C. § 1396p(c)(2)(A)(iv)1 and N.J.A.C. 10:71-4.10(d)2. The level and duration of care generally must be documented, which is why this exception turns on proof rather than the family relationship alone.
• Spend-down strategy: Use excess assets to pay for home improvements, prepay funeral expenses, pay off debts, purchase exempt assets (vehicle, household goods), or make other expenditures that reduce countable assets without triggering penalties.

Protecting the Community Spouse

Crisis strategies and advance strategies alike change shape when the applicant is married, because federal law layers a second set of rules on top of the basic limits. When one spouse enters a nursing home and the other remains at home (the "community spouse"), the spousal-impoverishment provisions of 42 U.S.C. § 1396r-51, implemented in New Jersey through N.J.A.C. 10:71-4.82, are designed to keep the at-home spouse from being impoverished by the cost of the other spouse's care:

• Community Spouse Resource Allowance (CSRA): In 2026, the community spouse may retain up to $162,660 of the couple's combined countable assets, subject to the spousal-impoverishment calculation.
• Minimum Monthly Maintenance Needs Allowance (MMMNA): The 2026 base community-spouse maintenance allowance is $2,643.75/month through June 30, 2026, and $2,705/month effective July 1, 2026. It may increase depending on shelter and utility allowances, subject to the applicable federal and state caps.
• Home protection: The family home is generally exempt from Medicaid's asset count while the community spouse lives there, under the home-exemption rules in N.J.A.C. 10:71-4.43. That exemption protects the home during the institutionalized spouse's lifetime, but it does not, by itself, protect it from estate recovery after both spouses have died -- which is one reason advance trust planning often still matters even for couples.

These protections are meaningful but not sufficient for many families. A community spouse with the protected resource allowance and a home still faces the possibility of outliving their resources -- especially if the nursing home stay extends for years. Proper planning helps ensure the community spouse retains enough to maintain their quality of life indefinitely.

Medicaid Estate Recovery

New Jersey operates a Medicaid Estate Recovery Program (MERP) under N.J.S.A. 30:4D-7.21 and N.J.A.C. 10:49-14.12, implementing the federal mandate of 42 U.S.C. § 1396p(b)3. MERP seeks reimbursement from the estates of deceased Medicaid recipients for benefits paid during their lifetime. After the Medicaid recipient dies, DMAHS can place a lien on their estate -- including real property -- and recover the costs of care from the estate before assets are distributed to heirs.

Estate recovery is another reason advance planning is important. Assets transferred to an irrevocable trust before the lookback period may reduce recovery exposure, but the answer depends on benefit history, title, retained rights, survivor protections, trust terms, and state review. Assets that remain in the individual's name -- including a home that was exempt during their lifetime -- may be vulnerable to estate recovery after death.

There are limits on recovery that matter to families. New Jersey generally does not pursue recovery while a surviving spouse is living, or while a surviving child who is under 21, blind, or permanently disabled survives, and it can waive recovery in cases of demonstrated undue hardship. Those protections are real, but they are exceptions to a recovery program that otherwise reaches the probate estate -- which is why the planning question is rarely "will there be recovery" and more often "what is left in the estate for recovery to reach."

Veterans Benefits for Long-Term Care

Veterans and surviving spouses of veterans may qualify for the VA Aid and Attendance benefit -- a monthly addition to the VA improved pension that helps cover assisted living, memory care, or in-home care under 38 C.F.R. § 3.3511 and 38 C.F.R. § 3.3522. The reason it matters here is sequencing: Aid and Attendance can fund care during the years before nursing-home placement, while the income and asset thresholds for the VA pension differ from Medicaid's and have their own three-year transfer lookback under 38 C.F.R. § 3.2763. Because a transfer that helps a VA application can hurt a later Medicaid application, the two programs are best planned together rather than in sequence.

Qualification requires wartime service, a medical need for assistance with daily activities, and meeting income and asset thresholds that are more generous than Medicaid's. Simon Law Group helps veterans and their families navigate the application process.

The practical takeaway is that a veteran with care needs but not yet in a nursing home often has a benefit available that the rest of this page does not address -- and that the right move is to coordinate the VA and Medicaid timelines from the start, so that a step taken to qualify for one does not quietly disqualify the family from the other later.

Common Misconceptions About Medicaid Planning

• "Medicare will cover nursing home care." -- Medicare covers short-term skilled nursing only (up to 100 days). It generally does not cover long-term custodial care, which is what most nursing home residents need.
• "I'll just give everything to my kids." -- Transfers within the five-year lookback create penalty periods. Your children receive the assets, but you cannot access Medicaid until the penalty expires -- leaving you without coverage during the gap.
• "Medicaid planning is only for the poor." -- Middle-class families with $300,000-$800,000 in assets are the most affected. Wealthy families can afford to pay privately. Families with very few assets already qualify. It is the middle class that faces the devastating spend-down without planning.
• "It's too late to plan." -- Crisis planning strategies exist even at the time of nursing home admission. They are more limited and more complex than advance planning, but they can still preserve significant assets for the community spouse and family.
• "Medicaid planning is illegal or unethical." -- Medicaid planning uses strategies permitted by federal and state law. Congress designed the Medicaid program with transfer rules, exemptions, and spousal protections. Using them is responsible financial planning when done truthfully and with proper disclosure.

Protect Your Family's Future -- Start Planning Now

The five-year lookback is not negotiable, but that is a reason to contact counsel now, not to wait. Simon Law Group helps New Jersey families evaluate their long-term care risk, consider legally sound asset and eligibility strategies, and navigate the Medicaid application process when the time comes. Whether you are planning years ahead or facing an immediate need, we can help.

A first consultation is concrete, not abstract: we look at the actual assets, the home, the marital situation, and the care timeline, and we tell you which strategies are still open and which the calendar has already closed. Even in a crisis admission, there may be options to protect income, allowances, housing stability, or records for the spouse who remains at home.

How we help: We review the care timeline, five-year transfer history, home, income, marital facts, existing documents, and application records before separating advance planning from crisis options. The analysis is bespoke, not a Medicaid-planning template. Share the care timeline and assets that need an eligibility review.