by Jose D. Roman | Mar 25, 2026 | Estate Planning, Guardianship, Irrevocable Family Trusts, Medicaid, Medicaid Planning, Power of Attorney, Trusts
When most people hear the word “divorce,” they think of a relationship in crisis. But for some New Jersey couples facing the catastrophic cost of long-term care, divorce is not a sign of a failing marriage — it is a deliberate financial planning strategy designed to protect a healthy spouse from impoverishment while allowing the other spouse to qualify for Medicaid.
It sounds counterintuitive. It raises profound emotional and ethical questions. And it is not a strategy that is right for most families. But in the right circumstances, a so-called “Medicaid divorce” is a legitimate legal strategy under New Jersey law.
Why Married Couples Face a Unique Medicaid Challenge
Medicaid treats married couples differently than single individuals when assessing eligibility for long-term care benefits. When one spouse applies for Medicaid to cover nursing home or home-based long-term care, Medicaid looks at the combined assets of both spouses — regardless of whose name the assets are in — and requires a spend-down to very low levels before the institutionalized spouse qualifies.
New Jersey does provide some protection for the healthy spouse, known as the “Community Spouse.” The Community Spouse Resource Allowance (CSRA) permits the Community Spouse to retain a portion of the couple’s combined countable assets. For 2026, the CSRA in New Jersey ranges from a minimum of $32,532 to a maximum of $162,660, depending on the total assets. The community spouse is also entitled to a Minimum Monthly Maintenance Needs Allowance (MMMNA) to cover monthly living expenses — currently $2,643.75 per month.
For couples with modest assets, the CSRA and MMMNA may provide adequate protection. But for couples with significant savings these protections may still leave the community spouse facing financial hardship after a Medicaid spend-down.
What Is a Medicaid Divorce?
A Medicaid divorce is exactly what it sounds like: the couple obtains a real, legal divorce for the primary purpose of restructuring their assets. If done properly the divorce allows the Medicaid applicant spouse to qualify for Medicaid while allowing the healthy spouse to retain a larger share of the marital estate than Medicaid’s spousal protection rules would otherwise permit.
This is not a separation, a legal fiction, or a paper transaction. New Jersey requires an actual divorce. The parties must satisfy the grounds for divorce under New Jersey law — most commonly irreconcilable differences under N.J.S.A. 2A:34-2(i), which requires only that the parties have experienced irreconcilable differences for a period of six months. Establishing grounds is generally straightforward. The harder questions involve asset division, legal capacity, and Medicaid’s scrutiny of the resulting property settlement.
How Divorce Can Help: The Mechanics
Under New Jersey matrimonial law, divorce entitles each spouse to an equitable distribution of marital assets. “Equitable” does not necessarily mean equal — courts consider a range of factors, including each spouse’s financial needs, health, and ability to earn income. In the context of a Medicaid divorce, the parties’ attorneys will negotiate a property settlement agreement (PSA) that awards the healthy spouse a disproportionate share of the marital estate — often well above 50 percent — based on their demonstrated need to support themselves independently.
Once the divorce is finalized and assets are distributed pursuant to a court order, Medicaid should treat the applicant spouse’s eligibility as a single individual. The assets awarded to the now ex-spouse are no longer counted when applying for Medicaid. If the applicant spouse’s retained assets fall below Medicaid’s $2,000 limit, they may qualify for long-term care Medicaid.
Critically, under New Jersey law, a court order transferring assets to the community spouse will supersede Medicaid’s spousal resource rules. This is the legal foundation that makes Medicaid divorce viable in New Jersey: the court’s equitable distribution order takes precedence over Medicaid’s default calculation of spousal assets.
The Transfer Penalty Risk: Proceed with Caution
The most significant legal risk in a Medicaid divorce is the transfer penalty. Medicaid imposes a look-back period of 60 months, during which any asset transfers for less than fair market value are penalized with a period of ineligibility. A divorce property settlement that awards the community spouse an outsized share of marital assets could be characterized by Medicaid as a disqualifying transfer — unless the division is properly structured and supported by documented findings.
New Jersey Medicaid does not simply accept a property settlement agreement at face value. The agency will scrutinize the terms of the divorce decree and the underlying rationale. A PSA that reads like a Medicaid planning document, with no independent factual basis for the proposed distribution, is unlikely to survive that scrutiny.
This is why Medicaid divorce requires coordinated representation by both a matrimonial attorney and an experienced elder law attorney. The two bodies of law must work together, and a misstep in either domain can result in a significant period of Medicaid ineligibility at precisely the moment care is most urgently needed.
The Legal Capacity Question
One of the most difficult issues in Medicaid divorce planning is legal capacity. When a spouse is suffering from a condition that impairs cognitive functioning, their ability to participate in — and consent to — divorce proceedings must be carefully evaluated before any action is taken.
If the Medicaid applicant spouse lacks capacity, the question becomes whether a Power of Attorney gives the agent authority to pursue or consent to divorce on their behalf. Most “standard” Powers of Attorney in New Jersey do not explicitly authorize the agent to file for or consent to divorce proceedings. This is a significant gap. Families contemplating Medicaid divorce as a potential future strategy should ensure that their Power of Attorney documents are drafted broadly enough to address this contingency — or that the question is addressed before capacity is lost.
If no Power of Attorney is in place and the applicant spouse lacks capacity, it may be necessary to pursue guardianship before any matrimonial proceedings can commence. That adds time, cost, and complexity to an already complicated situation.
The Emotional Reality
No discussion of Medicaid divorce is complete without acknowledging what it asks of a couple. For a husband and wife who have been together for many years, the idea of filing for divorce — even “on paper” — can feel like a profound betrayal of the relationship, regardless of the financial logic. Many families ultimately decide against it for this reason alone, and that is a completely legitimate choice.
Some couples find it helpful to think of the divorce as a legal and financial restructuring that does not change the nature of their relationship. They may continue to care for one another as spouses in every meaningful sense. The legal status changes; the relationship does not have to. But this reframing does not work for everyone, and it should never be minimized or dismissed.
Divorce can also impact Social Security survivor benefits, inheritance rights, life insurance beneficiary designations, and existing estate plans. Every one of these downstream consequences needs to be evaluated before proceeding.
Alternatives Worth Considering First
Before pursuing a Medicaid divorce, families should work with an elder law attorney to evaluate whether less disruptive alternatives can achieve comparable results. Depending on the facts, these may include:
- Irrevocable Medicaid trusts: Assets transferred to an irrevocable trust more than five years before a Medicaid application are not counted.
- Convert Countable Assets to Exempt Assets: Converting countable assets into exempt ones — such as home improvements, paying off a mortgage, purchasing a prepaid funeral trust, or buying a Medicaid-compliant annuity — can reduce countable assets without a transfer penalty.
Final Thoughts
Medicaid divorce is one of the most emotionally complex strategies in the elder law toolkit. It is also, in the right circumstances, a legally sound and financially significant option that can protect a community spouse from genuine impoverishment. The key words are “right circumstances.” This is not a strategy to pursue without extensive legal counsel from attorneys who understand both New Jersey matrimonial law and Medicaid eligibility rules. The financial, legal, and emotional stakes are too high for anything less. If you are facing a situation where one spouse needs long-term care and you are concerned about what that means for the other, contact your attorney to discuss options.
by Jose D. Roman | Mar 18, 2026 | Estate Planning, Last Will and Testament, Medicaid, Medicaid Planning, Trusts
Families planning for a loved one with a disability in New Jersey often face the same question: should we set up a Special Needs Trust, open an ABLE account, or both? The answer depends on the individual’s age, the amount of money involved, and the kinds of expenses you need to cover.
Both tools are designed to preserve eligibility for public benefits like Medicaid and Supplemental Security Income (SSI) while allowing a person with disabilities to have access to additional resources. I’ve previously covered SSI Medicaid eligibility in New Jersey in detail. I’ve also given an overview of NJ ABLE accounts and how they can help a family save, while preserving SSI eligibility. This post focuses on Special Needs Trusts and ABLE accounts, and how to choose between the two tools — or use them together.
What Is a Special Needs Trust?
A Special Needs Trust (SNT) is a legal trust designed to hold assets for the benefit of a person with a disability without disqualifying them from means-tested government benefits. The key is that the trust — not the individual — owns the assets, so they do not count toward Medicaid or SSI resource limits.
There are two main types of Special Needs Trusts in New Jersey:
- First-Party: Funded with the beneficiary’s own assets — for example, a personal injury settlement or an inheritance received directly. Must be established before the beneficiary turns 65. Upon the beneficiary’s death, Medicaid must be reimbursed for benefits paid.
- Third-Party: Funded with assets belonging to someone other than the beneficiary — typically a parent, grandparent, or other family member. No age restriction. No Medicaid payback requirement upon death, which makes this the preferred option for family estate planning.
A trustee — often a family member, attorney, or professional trust company — manages the trust and makes distributions on the beneficiary’s behalf. Distributions must supplement, not replace, government benefits. This means trust funds generally cannot be used for food or shelter without impacting SSI and Medicaid eligibility.
What Is an ABLE Account?
An ABLE account (Achieving a Better Life Experience) is a tax-advantaged savings account available to individuals whose disability began before age 46 (increased from 26 effective January 1, 2026). New Jersey’s program is administered through NJ ABLE. For a full breakdown of eligibility and benefits, see my earlier post: NJ ABLE Accounts: Preserving Benefits for Individuals with Disabilities.
Key features of an ABLE account:
- Funds are not counted as assets for Medicaid or SSI purposes (up to $100,000 for SSI)
- Annual contribution limit: $20,000 in 2026 (with additional contributions allowed under the ABLE to Work Act for working beneficiaries)
- Total account balance cap: $305,000 in New Jersey
- The account holder — or their legal representative — controls the account directly
- Can be used for a broad range of qualified disability expenses, including housing, transportation, education, health, and more
When a Special Needs Trust Makes More Sense
A Special Needs Trust is typically the better choice when:
- The beneficiary is receiving a large sum — such as an inheritance, personal injury settlement, or life insurance proceeds — that exceeds ABLE account contribution or balance limits
- The disability onset was at age 46 or older, making the individual ineligible for an ABLE account
- A family member wants to leave money to a loved one with disabilities as part of their estate plan (a third-party SNT is the preferred vehicle here)
- Complex financial management is required and a professional trustee is needed
- The family wants to avoid the Medicaid payback requirement upon death — only possible with a third-party SNT
When an ABLE Account Makes More Sense
An ABLE account is typically the good choice when:
- The individual’s disability began before age 46
- The goal is to set aside modest amounts for day-to-day supplemental expenses without the cost and complexity of a trust
- The individual wants direct control over their own funds
- The family wants a simple, low-cost planning tool to complement existing benefits
- Contributions from family members, friends, or employers are expected over time
Can You Use Both?
Yes — and for many families, using both tools together is an effective strategy. A common approach:
- Establish a third-party Special Needs Trust in the parents’ estate plan to receive larger inheritances or life insurance proceeds
- Open an ABLE account for the beneficiary to handle smaller, recurring disability-related expenses with greater flexibility and direct access
The two tools complement each other well. The SNT handles larger, longer-term assets with professional oversight. The ABLE account provides the beneficiary with day-to-day financial autonomy without jeopardizing benefits.
Important Caution: Get it Right from the Start
Both Special Needs Trusts and ABLE accounts involve rules that — if not followed carefully — can inadvertently disqualify a person from Medicaid or SSI. With a Special Needs Trust in particular, improper distributions (for example, paying for food or rent directly) can reduce SSI benefits dollar for dollar.
Before establishing either tool, consult with a New Jersey elder law or special needs planning attorney to ensure the structure is right for your family’s situation.
Final Thoughts
There is no one-size-fits-all answer. The right tool depends on your loved one’s age, the assets involved, and your long-term planning goals. For families with a child or adult with disabilities in New Jersey, both a Special Needs Trust and an ABLE account deserve a place in the conversation. Read my earlier post on NJ ABLE Accounts for a deeper dive into how ABLE accounts work.
by Jose D. Roman | Mar 1, 2026 | Consumer Advocacy, Legal Bulletin, Medicaid, Medicaid Updates
As a New Jersey Medicaid lawyer, I’m often asked whether immigrants—especially those who are undocumented—can qualify for Medicaid or other forms of public health coverage. The answer is complicated, because eligibility depends on a mix of federal law, state initiatives, and funding streams that shift with each legislative cycle. The short answer is that New Jersey offers more inclusive health coverage than most states, but many immigrants still face limits depending on their immigration status.
Lawfully Present vs. Undocumented: A Crucial Distinction
Federal Medicaid law draws a sharp line between immigrants who are “lawfully present” and those who are “undocumented.” Lawfully present immigrants include lawful permanent residents (green card holders), refugees, asylees, victims of trafficking, certain humanitarian parolees, and others permitted to live in the U.S. under federal immigration law.
Many of these immigrants can qualify for Medicaid, though most must first wait five years after obtaining status before they become eligible. Historically, refugees, asylees, and trafficking victims were exempt from that five-year bar and could access coverage immediately. As explained below, the One Big Beautiful Bill Act (OBBBA) has significantly changed this going forward, with major provisions taking effect October 1, 2026.
By contrast, undocumented immigrants—those without lawful status—cannot enroll in full Medicaid coverage under federal law. But in New Jersey, there are exceptions and state-funded programs that fill some of the gaps.
New Jersey’s State Initiatives: Expanding Coverage for Children and Families
One of the most significant New Jersey state programs is Cover All Kids. Enacted into law in 2021, the program was implemented in phases, with full coverage for undocumented children taking effect on January 1, 2023, under Governor Murphy’s administration. It allows all children under 19 to receive NJ FamilyCare coverage regardless of immigration status, as long as they meet the income and residency rules. It is a groundbreaking policy that recognizes every child’s need for health care, no matter where they were born. It’s important to understand how it’s funded. Because federal Medicaid and Children’s Health Insurance Program (CHIP) funds cannot be used for undocumented children, Cover All Kids is paid for entirely by New Jersey.
New Jersey also provides coverage for pregnant women, though the scope depends on immigration status. U.S. citizens and lawfully present immigrants with low are eligible for full NJ FamilyCare/Medicaid coverage during pregnancy, with postpartum coverage continuing for 12 months after delivery. Undocumented women who do not qualify for full Medicaid may be eligible for the NJ Supplemental Prenatal and Contraceptive Program (NJSPCP), which covers outpatient prenatal and family planning services. Emergency labor and delivery for undocumented women may be covered separately under Emergency Medicaid, described below.
Emergency Coverage for All
Even for those who don’t qualify for Medicaid benefits, emergency medical care remains available. Through the Medical Emergency Payment Program (commonly called Emergency Medicaid), immigrants—regardless of status—can receive coverage for treatment of life-threatening conditions, including labor and delivery.
This program is not purely state-funded. Federal law allows states to receive federal Medicaid matching funds for emergency services provided to individuals who are otherwise Medicaid-eligible but not lawfully present. New Jersey is a Medicaid expansion state, meaning it currently receives approximately 90% federal reimbursement for these emergency services, with the state covering the remainder. Hospitals remain legally required under the federal Emergency Medical Treatment and Labor Act to provide emergency stabilization to any patient regardless of immigration status or ability to pay. Only true emergencies qualify for Emergency Medicaid; any non-emergency care for undocumented immigrants must be fully funded by the state if offered at all.
The “One Big Beautiful Bill” and Its Sweeping Impact on Immigrant Coverage
The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, makes the most far-reaching changes to immigrant Medicaid eligibility since the 1996 welfare reform law. While much public attention has focused on work requirements and hospital reimbursements, the OBBBA’s effects on immigrant health coverage are equally significant.
The key changes for New Jersey residents are:
- Refugees, asylees, humanitarian parolees, and trafficking victims lose federal Medicaid and CHIP eligibility entirely (effective October 1, 2026). Under prior law, these groups were exempt from the five-year waiting period and could access Medicaid immediately upon receiving status. Under the OBBBA, they are removed from the definition of “qualified alien” for Medicaid purposes altogether. Only green card holders (lawful permanent residents), certain Cuban and Haitian entrants, and citizens of Freely Associated States remain eligible for federal Medicaid. States may still choose to cover lawfully residing children and pregnant women using their own funds.
- Emergency Medicaid federal reimbursement is reduced (effective October 1, 2026). For undocumented immigrants who would otherwise be Medicaid-eligible, the federal matching rate for emergency services drops from New Jersey’s current 90% expansion rate to approximately 50–65%. This does not eliminate emergency coverage, but it significantly increases the financial burden on the state.
- Cover All Kids remains intact because it is funded entirely by New Jersey for undocumented children. The OBBBA does not penalize states for using their own dollars to cover undocumented children.
These changes mean that thousands of New Jersey residents who are lawfully present in the United States—people who went through the legal process to obtain refugee, asylee, or humanitarian parole status—will lose access to federally funded health coverage starting October 2026, unless Congress acts.
What Democrats Want to Restore
In response, Democratic lawmakers in Congress have proposed measures to reverse several of these cuts. Their efforts aim to restore the federal Medicaid matching funds eliminated under the OBBBA, particularly for emergency medical services and for programs that assist lawfully present immigrants whose eligibility was stripped.
The Democratic proposals also seek to eliminate new work requirements, restore funding to rural hospitals, and extend enhanced ACA premium tax credits (topics not covered in this article). As the nonpartisan Kaiser Family Foundation has noted, these proposals do not create new eligibility for undocumented immigrants (who were already ineligible for federally funded coverage before the OBBBA). Rather, they aim to restore coverage for lawfully present immigrants like refugees and asylees, and to ensure that mixed-status families don’t lose access to care because of shifting political priorities or administrative red tape.
In addition, Democrats want to reinstate the higher federal cost-sharing for emergency services provided to immigrants without legal status—in practical terms, restoring the 90% reimbursement for states like New Jersey that maintain immigrant-inclusive safety nets.
Where Things Stand Now
New Jersey continues to be one of the more immigrant-friendly states when it comes to health coverage. Undocumented children remain protected under Cover All Kids. Lawfully present pregnant women receive full Medicaid with 12 months of postpartum coverage. Emergency care remains available to all through Emergency Medicaid, even as the federal government will cover a lower share of those costs beginning in October 2026.
However, the most significant near-term threat is to lawfully present immigrants—refugees, asylees, and humanitarian parolees—who will lose federal Medicaid eligibility entirely under the OBBBA unless that provision is reversed. Whether New Jersey chooses to bridge the gap with state dollars, as it has done for undocumented children, remains to be seen.
From a policy perspective, the direction of federal law will determine how sustainable New Jersey’s approach remains. If the state continues to shoulder the costs of inclusivity while federal funding shrinks, the long-term pressure on the state budget will grow. On the other hand, restoring the federal match for emergency and qualified immigrant coverage could stabilize the system and maintain access for some of New Jersey’s most vulnerable residents.
Final Thoughts
As a Medicaid lawyer practicing in New Jersey, I see firsthand how these laws affect real people. Families trying to navigate complex immigration and health systems often face confusion, fear, and financial strain. Understanding who qualifies—and how programs like Cover All Kids and Emergency Medicaid are funded—is essential for both residents and practitioners.
The bottom line is this: New Jersey has built a relatively compassionate model that balances legal restrictions with state-funded solutions. But that balance depends heavily on federal cooperation. With the OBBBA’s sweeping changes to lawfully present immigrant eligibility and the ongoing debate in Congress, the future of immigrant health coverage in New Jersey will likely hinge on how much support Washington is willing to restore.
by Jose D. Roman | Feb 12, 2026 | Medicaid, Medicaid Planning, Power of Attorney
When caring for an aging parent or a disabled loved one, convenience and simplicity is usually the goal, especially when it comes to managing money. Many families find it convenient to add a parent’s name to a college aged child’s account or an adult child’s name to an aging parent’s account, assuming this is a smart way to deposit money and manage bills.
However, in the world of New Jersey Medicaid, this convenience can become a costly crisis. When a loved one needs to apply for Medicaid, that joint account might be the very thing that triggers a denial.
The Rule You Need to Know: N.J.A.C. 10:71-4.1(d)2
New Jersey Medicaid doesn’t view joint accounts the way you do. Their treatment of these funds is governed by N.J.A.C. 10:71-4.1(d)2. The regulation states:
When a savings or checking account is held by the eligible individual with other parties, all funds in the account are resources to the individual so long as he or she has unrestricted access to the funds (that is, an “or” account), regardless of their source. When the individual’s access to the account is restricted (that is, an “and” account), the county welfare agency shall consider a pro rata share of the account toward the appropriate resource maximum, unless the client and the other owner demonstrate that actual ownership of the funds is in a different proportion.
This regulation establishes a harsh default presumption: If your name is on it, you own it.
The impact on eligibility depends entirely on one small word on the bank statement: “or” versus “and.” If an account is titled with “or,” the applicant has “unrestricted access” to the funds. Under the law, 100% of the balance is counted as a resource for the Medicaid applicant. It doesn’t matter if the non-Medicaid applicant deposited every cent of that money. Medicaid assumes the entire balance belongs to the person applying for benefits. If the account is an “and” account that requires both signatures for a withdrawal, Medicaid typically counts a pro rata share (usually 50/50) toward the applicant’s resource limit. While this is slightly better than the “or” scenario, it still places the burden of proof on you to show that the ownership should be divided differently.
With Medicaid resource limits being extremely low, ranging from $2,000 to $6,000 depending on the program and marital status, counting accounts with funds that really don’t belong to the Medicaid applicant can present a real problem.
Can You Fight the Presumption?
Whether the account it titled “and” or “or,” the County social services agency reviewing the Medicaid application will not simply take your word for it. To prove the money doesn’t belong to the applicant, you must provide clear documentary evidence that proves the applicant does not own the money. This includes copies of checks and deposit slips showing where the funds originated as well as a detailed paper trail of how the money was spent. If you can show that all the money coming in and out belonged to and was spent on the non-applicant you may be able to convince the County case handler to disregard the account. Even with solid evidence the County social services agency reviewing the application may still take a hard stance, count the funds toward the resource limit, and deny the application. In sum - rebutting these claims is most often an uphill battle. Absent clear proof, the County will count the funds against the applicant.
The Better Way: Power of Attorney
A joint bank account is not an asset-protection strategy and not a good way to manage an aging or disabled individual’s money. If the goal is to help a loved one manage their income and pay bills, the proper tool is a Power of Attorney (POA). A POA allows you to manage the funds without making those funds yours in the eyes of Medicaid. It provides the same convenience without the massive eligibility risk.
The Bottom Line
Adding a name to an account without legal guidance is a common mistake that creates a mountain of paperwork to undo. Effective Medicaid planning requires understanding how New Jersey actually applies its regulations, rather than relying on assumptions.
by Jose D. Roman | Oct 7, 2025 | Legal Bulletin, Medicaid, Medicaid Planning, Medicaid Updates
When applying for Medicaid or completing annual renewal paperwork in New Jersey, deadlines are critical. Missing a due date for requested documents can lead to a denial of the application or termination of benefits—sometimes with devastating consequences. But what happens if you mail documents on time but the agency later claims they were received late or not at all? Can you rely on the legal principle called the Mailbox Rule to prove that you provided a timely response?
What Is the Mailbox Rule?
The Mailbox Rule is a common-law legal doctrine that creates a rebuttable presumption of receipt. If a letter is properly addressed, stamped, and mailed, the law presumes it was received by the addressee in the normal course of mail delivery. The New Jersey Supreme Court affirmed this rule in SSI Medical Services, Inc. v. State, 146 N.J. 614, 621 (1996), explaining:
Where the evidence shows that a letter properly directed was mailed and not returned, a presumption arises that it reached its destination in due course of mail and was actually received by the person to whom it was addressed.
Medicaid and the Limits of the Mailbox Rule: A.N. v. Passaic County (2024)
In a 2024 Medicaid Fair Hearing matter, A.N. v. Passaic County Board of Social Services, an applicant submitted a Medicaid application on January 31, 2024. The agency sent a written request for income verification, giving a deadline of March 2. The applicant later claimed he mailed the requested documents, but the county said they were never received—and no proof of mailing was provided.
In reviewing the case, the administrative law judge acknowledged the Mailbox Rule under SSI Medical Services and the traditional presumption that mailed documents are received. However, the judge concluded that there was no evidence that the requested documents were mailed or emailed. Because the applicant failed to provide reliable proof of mailing (e.g., a copy of postmarked mail, certified mail receipt, tracking number, fax confirmation, sent email), the agency’s determination stood, and the application was denied.
Key Takeaways
- The mailbox rule is recognized in the Medicaid application context in New Jersey.
- Applicants bear the burden of proving compliance with submission deadlines.
- Testimony of mailing alone is likely not sufficient for court – you need to keep proof of mailing.
Best Practices for Medicaid Applicants
- Use certified or priority mail with a tracking number and return receipt.
- Retain copies of all submitted documents, including the envelope with the postmark.
- Follow up with the agency to confirm receipt—by phone, email, or in writing—and document all communications.
- Do not rely solely on regular mail, especially for time-sensitive or high-stakes Medicaid communications.
Conclusion
While the Mailbox Rule offers some protection in many legal contexts, it provides limited security in New Jersey Medicaid matters. Administrative agencies and courts expect actual, verifiable receipt of applications, verifications, and renewals. If you or your client is dealing with Medicaid, don’t take chances—take steps to ensure every document is received and acknowledged.
by Jose D. Roman | Apr 10, 2025 | Consumer Advocacy, Legal Bulletin, Medicaid, Medicaid Planning, Medicaid Updates
The situation is all too common for Elder Law attorneys and their Medicaid applicant clients – a denial or termination of benefits due to supposedly insufficient documents, even when the agency is provided with everything it asked for. A recent decision, M.L. v. Essex County Division of Family Assistance and Benefits, A-0884-23 (March 18, 2025), highlights the typical scenario where the agency arbitrarily denies an application for reasons not apparent until after the fact. The court’s ruling underscores the importance of procedural fairness in Medicaid eligibility determinations and provides a summary of the law for advocates to use when pushing back on denials or terminations based on insufficient documents.
Case Background
M.L., an elderly nursing home resident, applied for Medicaid benefits on March 31, 2023. The Essex County Division of Family Assistance and Benefits initially requested additional documentation, including bank statements from Wells Fargo, to verify financial eligibility. M.L. promptly requested and obtained these records from his bank and provided copies to Essex County before the deadline. However, Essex County denied his application, claiming that he provided insufficient financial documentation and had unexplained withdrawals. M.L. promptly filed an appeal, as well as a second Medicaid application. The second application contained additional records, including records from a newly discovered Citizens Bank account. During the appeal, M.L. argued that he had substantially complied with Essex County’s requests. An administrative law judge (ALJ) agreed, ruling that M.L. had satisfied Medicaid eligibility requirements. However, the Division of Medical Assistance and Health Services (DMAHS) rejected the ALJ’s decision, affirming the original denial on the grounds that M.L. failed to provide all required documentation within the designated timeframe, including the additional statements from the Citizens Bank account.
Appellate Court’s Summary of the Law
Upon review, the Appellate Division found DMAHS’s final decision to be arbitrary, capricious, and unreasonable. The Court provided a useful review of New Jersey regulatory law that applies in these circumstances, which is summarized below.
The local County Welfare Agency (CWA) and its caseworkers “exercise direct responsibility in the application process to . . . receive applications.” N.J.A.C. 10:71-2.2(c)(2). The caseworker is charged with evaluating an applicant’s eligibility for Medicaid benefits. N.J.S.A. 30:4D-7a; N.J.A.C. 10:71-2.2(a); N.J.A.C. 10:71-3.15. “The process of establishing eligibility involves a review of the application for completeness, consistency, and reasonableness.” N.J.A.C. 10:71-2.9.
While the applicant is “the primary source of information,” the caseworker is responsible for making “the determination of eligibility and to use secondary sources when necessary, with the applicant’s knowledge and consent.” N.J.A.C. 10:71-1.6(a)(2). The caseworker is not limited in the use of secondary sources to obtain necessary verification information. N.J.A.C. 10:71-4.1(d)(3) states:
The CWA shall verify the equity value of resources through appropriate and credible sources . . . . If the applicant's resource statements are questionable, or there is reason to believe the identification of resources is incomplete, the CWA shall verify the applicant's resource statements through one or more third parties.
The applicant is responsible for cooperating fully with the verification process if the caseworker must contact a third party to verify an applicant’s resources. N.J.A.C. 10:71-4.1(d)(3)(i). The agency may perform a collateral investigation to “verify, supplement or clarify essential information.” N.J.A.C. 10:71-2.10(b).
Under N.J.A.C. 10:71-2.2, the caseworker must communicate with the applicant regarding the claimed deficiencies and then, under N.J.A.C. 10:71-2.10(b), provide an opportunity for the applicant to verify, supplement, or clarify the information before denying an application.
N.J.A.C. 10:71-2.2(e)(1) to (3) requires an applicant to:
- Complete, with assistance from the CWA if needed, any forms required by the CWA as a part of the application process;
- Assist the CWA in securing evidence that corroborates his or her statements; and
- Report promptly any change affecting his or her circumstances.
N.J.A.C. 10:71-2.2(c)(1) to (5) requires a caseworker to:
- Inform the applicants about the purpose and eligibility requirements for Medicaid Only,
- Inform them of their rights and responsibilities under its provisions and inform applicants of their right to a fair hearing;
- Receive applications;
- Assist . . . applicants in exploring their eligibility for assistance;
- Make known to . . . applicants the appropriate resources and services both within the agency and the community, and, if necessary, assist in their use; and
- Assure the prompt and accurate submission of eligibility data to the Medicaid status files for eligible persons and prompt notification to ineligible persons of the reasons for their ineligibility.
State agencies must “turn square corners” with the public they serve in carrying out their statutory responsibilities. W.V. Pangborne & Co. v. N.J. Dep't of Transp., 116 N.J. 543, 561–62 (1989). When this bedrock principle is read together with the above regulations, the dispositive legal conclusion is that both the applicant and the County have a duty under the regulations to take affirmative steps to communicate with each other regarding a pending application. The scope of this joint duty clearly includes the parties’ efforts to clarify prior communications about a pending application.
Court’s Ruling
Based on the summary of the law, the Appellate Division found that the applicant promptly gave the County what it asked for-- namely, the Wells Fargo statements. Upon receipt, the County’s duty was to review the pending application and notify the applicant concerning what, if any, additional information was required to make an eligibility determination. The record showed that the County failed to do so. Instead, it denied the March 31 application and only then informed the applicant that his application was deficient.
It followed that DMAHS’s final administrative decision adopting the improper denial of the March 31 application was arbitrary, capricious, and unreasonable. The Appellate Division reversed DMAHS’s decision and sent the case back to the County, instructing the agency to reopen and process M.L.’s Medicaid application.
Final Thoughts
Though practitioners know it is often the exception, this case serves as a crucial reminder that government agencies must adhere to procedural fairness when assessing Medicaid applications. Applicants have a right to clear communication and a reasonable opportunity to provide necessary documentation. Furthermore, state agencies cannot deny benefits based on minor technicalities or failures in their own procedures.
For Medicaid applicants facing similar challenges, this ruling reinforces the importance of persistence and legal advocacy. If you or a loved one has been wrongfully denied Medicaid benefits, consider consulting with an experienced attorney to ensure your rights are protected.