Qualifying for Medicaid Coverage for a NJ Nursing Home | Will Attorney Monmouth County
Nursing homes offer comprehensive, 24/7 nursing care for individuals who need long-term or short-term medical care but do not meet hospital admission requirements. These facilities provide a high level of care for patients in need of skilled medical intervention, including nursing and rehabilitation for severe physical or mental health challenges. Nursing home residents benefit from 24/7 supervision to promote safety, comfort, and improved health outcomes.
The personalized care nursing home patients receive differs from other senior or disability living, like independent living, assisted living, or memory care. Nursing homes are best for people who cannot find the same level of medical care elsewhere. But this high level of care typically means nursing homes are more expensive. Medicaid does help cover the costs of nursing home stays, but eligibility requirements can be strict.
Medicaid is a jointly funded federal and state program, so rules and benefits will vary from state to state. In New Jersey, to qualify for long-term care coverage through Medicaid, applicants must meet three requirements: financial eligibility, medical necessity, and residency.
Here is what you need to know about funding nursing home care through Medicaid in NJ.
The Three Eligibility Tests
New Jersey's most common Medicaid program for long-term care is the Medicaid Long-Term Services and Supports (MLTSS) program. This program covers care at nursing homes, assisted living facilities, and home care. To qualify, the applicant must pass the three tests detailed below. Failing even one test will result in denial of Medicaid assistance.
Financial Eligibility
Most Medicaid planning focuses on the financial eligibility test since medical necessity is typically unplanned and residency is normally fixed. Financial eligibility includes both your assets and your income.
Asset Eligibility
NJ Medicaid considers assets as either countable or exempt. Only “countable” assets are considered when determining eligibility. For a single applicant, countable assets must be $2,000 or less to qualify for Medicaid.
Countable assets include:
- Checking and savings accounts
- Certificates of Deposit
- Brokerage accounts, stocks, bonds, and mutual funds
- Retirement accounts and IRAs
- Cash value of life insurance policies (if value exceeds $1,500)
- Real estate outside of primary residence
- Revocable Living Trusts
New Jersey does not include specified exempt assets in the Medicaid resource limit. These include:
Primary Residence: The applicant's home is exempt if the applicant intends to return after care, or if a spouse, minor child, or disabled child continues to reside there. The home's equity cannot exceed $1,130,000 for 2026.
One Vehicle: One vehicle of any value is exempt if the vehicle is used for the transportation of the applicant or a family member.
Personal Items: This includes household furniture, appliances, and goods as well as clothing and other personal property.
Prepaid Irrevocable Funeral: A prepaid burial plot and irrevocable prepaid funeral contract is exempt.
Life Insurance Policies Under $1,500
Asset Limits
For single applicants, the countable asset limit is $2,000. For married applicants, the Community Spouse Resource Allowance (CSRA) ranges from $32,532 to $162,660. CSRA is determined based on a “snapshot” of the couple’s combined household assets on the date the institutionalized spouse enters the nursing home. The spouse may retain half of the combined assets, subject to specified minimum and maximum amounts. Any assets exceeding the maximum may be subject to an order for spousal income contribution or instead transferred using estate planning strategies.
Income Eligibility
NJ has an income cap for long-term care through Medicaid. Single applicants with gross monthly income over $2,982/month (for 2026) must establish a Qualified Income Trust (QIT), also known as a Miller Trust. Only after the establishment of this trust can Medicaid pay for care.
A QIT is an irrevocable trust specifically designed to hold any income that exceeds the income cap. The applicant’s excess income will be deposited into the trust. The trustee will then disperse the funds based on Medicaid’s rules. Typically, these funds go toward patient pay to the nursing home, personal expenses, or the individual’s spouse as a Minimum Monthly Maintenance Needs Allowance (MMMNA).
The MMMNA is intended to prevent the non-institutionalized spouse from living below a certain income. The income floor for 2026 is $2,705.00/month. If the spouse’s income falls below this point, the institutionalized spouse’s excess income can be used to make up the difference before it is used for patient pay. The MMMNA maximum allowance is $4,066.50/month.
Income not disbursed from the trust within the month will be included as an asset the following month.
Medical Necessity
The applicant must also be assessed for level of care and meet the minimum requirements for nursing facility level of care (NFLOC). In New Jersey, the applicant will be evaluated using a functional assessment tool designed to understand the applicant’s ability to perform specific Activities of Daily Living (ALDs). These include mobility, toileting, eating, dressing, and bathing. The assessment also measures the individual’s cognitive status. Even if an applicant meets the financial requirements, they must also meet the medical necessity requirement to qualify for long-term care through Medicaid.
Residency Requirements
The applicant must be a U.S. citizen or qualified immigrant AND be a resident of New Jersey. There is no minimum residency period, and an applicant may move to NJ to access care as long as they intend to stay in NJ. Temporary absences from NJ for the purpose of seeking medical care out-of-state do not disrupt residency status.
5-Year Look-Back Period
NJ Medicaid reviews financial transactions for the 60 months—or 5 years—before the application date. During this review, they will look into asset transfers, gifts, or assets sold for less than fair market value, which can trigger a penalty. The penalty is typically a period of Medicaid ineligibility. The ineligibility period is determined by dividing the transferred amount by the daily penalty of $420.67 (for 2026). For example, if you gift your child $200,000 to meet Medicaid requirements for long-term care, that amount will result in a 475-day ineligibility period.
Estate Planning for Medicaid
Estate planning strategies can protect your life savings and real estate from high nursing home and other care costs. NJ estate planning attorneys familiar with Medicaid rules and requirements can help you develop a Medicaid Asset Protection Trust (MAPT), which can shield your assets from Medicaid calculations after the 5-year look-back window passes. Estate planning can also include provisions for caregiver agreements and create a timeline for strategic spend-downs.
Veitengruber Law is an experienced estate planning attorney in New Jersey. We work with individuals to plan for the future while preserving their legacy. We can help you understand the requirements for Medicaid assistance while establishing a plan to protect your loved ones and your assets.