The New Jersey Department of Human Services, Division of Medical Assistance and Health Services issued Medicaid Communication No. 26-04 on April 6, 2026. The communication announces an increase in the Medicaid penalty divisor, effective April 1, 2026. The penalty divisor has increased from $402.74 to $420.67 per day.
The penalty divisor is the average daily cost of nursing home services in New Jersey, determined through an annual independent survey of all nursing facilities in the state. It is used to calculate the length of a Medicaid penalty period — the period of ineligibility imposed when an individual applying for Long Term Services and Supports (LTSS) has transferred assets for less than fair market value. The number of penalty days is calculated by dividing the value of the transferred asset by the daily penalty divisor, rounded down, with the penalty clock starting on the date the individual is otherwise determined eligible.
For a detailed discussion on transfer penalties read The 5-Year Lookback Rule in New Jersey: What It Is, How It Works, and Why Timing Matters.
Practitioners handling Medicaid planning matters involving asset transfers should update their calculations immediately. Read the full communication here.