New Jersey’s Medicaid Estate Recovery Reaches Survivorship Claims

New Jersey’s Medicaid Estate Recovery Reaches Survivorship Claims

by | Aug 25, 2026 | Estate Administration, Medicaid, Medicaid Estate Recovery, Probate

In a published decision issued on April 8, 2025, the New Jersey Appellate Division addressed a significant question involving Medicaid estate recovery: Can the State recover Medicaid benefits paid during a recipient's lifetime from the proceeds of a survivorship medical malpractice claim brought after the recipient's death?

In Estate of Leonor R. Dizon v. State of New Jersey, Department of Human Services, Division of Medical Assistance and Health Services, 481 N.J. Super. 451 (App. Div. 2025). the court answered that question with a clear yes. The decision confirms the consensus understanding of what constitutes an estate asset for Medicaid recovery purposes and serves as an important reminder for families pursuing litigation on behalf of deceased loved ones.

The Background

The decedent, Leonor Dizon, received Medicaid benefits from 2006 through 2018. After suffering injuries from a fall at a hospital, she died ten days later. Following her death, her estate filed a medical malpractice lawsuit that included survivorship claims. Meanwhile, the New Jersey Division of Medical Assistance and Health Services (DMAHS) asserted a Medicaid estate recovery lien of approximately $214,392, representing Medicaid benefits paid on her behalf after age fifty-five. The estate challenged the lien, arguing that the State's recovery should be limited only to any medical expenses recovered from the lawsuit and should not extend to the entire value of the survivorship claim.

The Legal Issue

At the center of the dispute was the distinction between two Medicaid recovery mechanisms: a) Third-Party Liability Recovery and b) Estate Recovery.New Jersey law permits Medicaid to recover medical expenses from settlements or judgments obtained against responsible third parties. This is commonly known as third-party liability recovery.  In addition, Federal and state law also require Medicaid estate recovery after the death of certain recipients, allowing the State to seek reimbursement from assets belonging to the deceased recipient's estate. The estate argued that proceeds from a survivorship action should be treated only as third-party recovery funds and therefore subject to more limited reimbursement rules. The State argued that survivorship claims are estate assets and therefore available for full estate recovery.

The Court's Decision

The Appellate Division sided with the State and affirmed the validity of the Medicaid lien. The court concluded that a survivorship cause of action is an asset of the decedent's estate and therefore falls within the broad definition of estate property subject to Medicaid estate recovery. The court emphasized several key principles:

1. Survivorship Claims Are Estate Assets

Under New Jersey's Survival Act, claims that belonged to a person before death survive and become assets of the estate. The estate representative essentially steps into the decedent's shoes and may pursue those claims after death. The court rejected the argument that an unfiled medical malpractice claim was merely speculative and therefore not property. Instead, it concluded that the decedent possessed an interest in the potential claim at the time of death, making it part of the estate.

2. Estate Recovery Is Broader Than Third-Party Recovery

The court explained that Medicaid estate recovery is not limited to reimbursement for injury-related medical expenses. Once a Medicaid recipient over age fifty-five dies, the State may pursue recovery from estate assets for all Medicaid benefits properly paid on the recipient's behalf.

3. Federal Anti-Lien Protections Do Not Apply the Same Way After Death

The estate relied heavily on the United States Supreme Court's decision in Arkansas Department of Health & Human Services v. Ahlborn, which limited Medicaid recovery from a living recipient's settlement. The Appellate Division distinguished that case, finding that the protections applicable to living Medicaid recipients do not prevent estate recovery after death.

Why This Case Matters

This decision has important implications for estate planning and estate administration. Loved ones pursuing survivorship claims should understand that any recovery may be subject to Medicaid estate recovery liens. Failure to investigate outstanding Medicaid claims could complicate estate administration and settlement distributions. Many families assume that a successful medical malpractice or personal injury action will ultimately benefit heirs. This case demonstrates that Medicaid liens may substantially reduce those recoveries when estate recovery laws apply.

The decision highlights the importance of proactive Medicaid planning. Understanding how estate recovery rules interact with litigation claims can help families avoid unexpected consequences and make informed planning decisions.

A Note About Wrongful Death Claims

One important distinction remains. The court noted that wrongful death claims, which seek compensation for the losses suffered by surviving family members, are generally not considered assets of the decedent's estate because those claims belong to the living family members of the deceased. As a result, wrongful death recoveries may be treated differently for Medicaid recovery purposes. Practitioners must carefully distinguish between these causes of action when evaluating potential liens.

Takeaway

The Appellate Division's decision confirms that a survivorship cause of action is an estate asset subject to Medicaid estate recovery. For Medicaid recipients over age fifty-five, the State's recovery rights may extend beyond injury-related medical expenses and reach the broader value of estate assets, including proceeds obtained through survivorship litigation.

Families administering estates that involve Medicaid benefits and pending litigation should carefully evaluate potential estate recovery claims before distributing assets or negotiating settlements.

NJ Medicaid Fair Hearing Process Changes in Effect July 1, 2026

by | Aug 4, 2026 | Legal Bulletin, Medicaid, Medicaid Updates

The New Jersey Department of Human Services, Division of Medical Assistance and Health Services issued Medicaid Communication No. 26-06 on June 23, 2026. The communication announces significant operational changes to the NJ FamilyCare Medicaid fair hearing process, effective July 1, 2026. These changes end a series of temporary procedural flexibilities that DMAHS put in place during the COVID-19 public health emergency unwinding period, which concluded December 31, 2025. Beneficiaries, advocates, and practitioners who handle Medicaid appeals should review these changes carefully.

The three key changes are:

  • End of automatic continuation of benefits pending appeal. During the unwinding period, benefits were automatically reinstated and continued for all members who filed a fair hearing request after a termination or reduction. That automatic reinstatement ends July 1, 2026. Going forward, members must affirmatively elect to continue benefits while their appeal is pending. If a member does not make that election, benefits will be paused. Members who elect continuation of benefits and ultimately lose their appeal may have the cost of services recouped by DMAHS under N.J.A.C. § 10:49-10.4(b) — but DMAHS has stated it will not seek recoupment for services delivered beyond the 90-day regulatory deadline for final administrative action, except in cases involving fraud or abuse of the hearing process.

  • Return to the 20-day fair hearing filing deadline. During the unwinding period, DMAHS temporarily extended the filing period to 60 days. That extension ends July 1, 2026, and the standard 20-day deadline under N.J.A.C. § 10:49-10.3(b) resumes. However, DMAHS is building in 10 days of mailing presumption time — five days for standard mail processing and five days to account for the USPS postmark rule change effective December 24, 2025 — meaning fair hearing notices will state that members have 30 days from the date on the notice to file. The request must be made within that 30-day window, with proof of mailing or faxing.

  • Resumption of DMAHS review of OAL Initial Decisions. Under standard procedure, OAL Administrative Law Judges conduct hearings and issue Initial Decisions, which DMAHS then reviews before issuing a Final Agency Decision. During the unwinding period, certain Initial Decisions in income, resource, and failure-to-provide-information cases were automatically adopted as Final Agency Decisions without DMAHS review. That shortcut ends July 1, 2026. DMAHS will now review Initial Decisions in all cases, though it expects to use a streamlined process for most routine cases, issuing a brief Final Agency Decision adopting the Initial Decision. Deeper review is reserved for cases involving material error, novel legal issues, or timely filed exceptions raising unusual circumstances.

The most consequential change for beneficiaries is the end of automatic aid continuation. Under the prior temporary process, filing a fair hearing request was sufficient to keep benefits running while the appeal was pending. That is no longer the case. Starting July 1, members who receive a termination or reduction notice must take an affirmative step to elect continuation of benefits — and the fair hearing notice itself will need to clearly communicate that option. Advocates should prepare clients to act on this immediately upon receipt of any adverse notice, and should ensure they understand the recoupment risk if the appeal is unsuccessful within the 90-day window.

The full communication, including a fact sheet with computation examples, is available here.

When Does New Jersey Medicaid Pay My Medicare Part B Premium?

When Does New Jersey Medicaid Pay My Medicare Part B Premium?

by | Jul 28, 2026 | Medicaid, Medicaid Planning

Many people turning age 65 are surprised to learn about the costs associated with Medicare. Medicare is not free. Most people pay no premium for Medicare Part A, which covers hospital services, but Medicare Part B — which covers doctor visits, outpatient care, and medical equipment — carries a monthly premium. In 2026, the standard Part B premium is $202.90 per month. For people with higher incomes, the premium is higher. If you have both Medicare and Medicaid, however, you may not have to pay that premium at all.

Full Dual Eligibles: SSI, ABD, and MLTSS Medicaid

If you receive full Medicaid coverage — meaning Medicaid pays for your medical services, not just your Medicare premiums — Medicaid will pay your Medicare Part B premium through a process called Medicare “buy-in.” This applies to people receiving SSI-linked Medicaid, ABD Medicaid (Aged, Blind, and Disabled), and NJ MLTSS Medicaid (Managed Long Term Services and Supports), which covers assisted living and nursing facility services.

For SSI recipients, the Medicare buy-in is effective as of the Medicaid enrollment date. For all other full Medicaid recipients, including MLTSS enrollees, the buy-in takes effect two months after enrollment. During that gap, you may still be paying the Part B premium out of pocket. Once the buy-in is processed, Medicaid reimburses you for any out of pocket premiums paid after the two month waiting period, while the buy-in was pending.

Partial Coverage: Medicare Savings Programs

If you do not qualify for full Medicaid but have limited income and resources, you may still be able to get help with your Part B premium through a Medicare Savings Program (MSP). New Jersey offers several levels of coverage:

  • Qualified Medicare Beneficiary (QMB): Covers the Part B premium, Part A and B deductibles, and coinsurance for people with income at or below 100% of the Federal Poverty Level (FPL).
  • Specified Low-Income Medicare Beneficiary (SLMB): Covers the Part B premium only, for people with income between 100% and 120% of FPL.
  • Qualifying Individual (QI / SLMB Q1): Covers part of the Part B premium for people with income between 120% and 135% of FPL.

You can apply for MSP benefits by completing the NJ Save application.

NJ Medicaid 2026 Community Spouse Maintenance Adjustments

by | Jul 21, 2026 | Legal Bulletin, Medicaid, Medicaid Updates

The New Jersey Department of Human Services, Division of Medical Assistance and Health Services issued Medicaid Communication No. 26-05 on June 11, 2026. The communication announces annual adjustments to the Community Spouse Maintenance Allowance (CSRA), shelter threshold, and related figures under N.J.A.C. 10:71-5.7, effective July 1, 2026. These figures govern how much of an institutionalized spouse's income may be set aside to support the spouse remaining in the community.

Key updated figures effective July 1, 2026:

  • Community spouse base maintenance allowance: Increased from $2,643.75 to $2,705.00 per month.

  • Excess shelter cost threshold: Increased from $793.13 to $811.50 per month. Shelter costs above this amount are added to the base allowance.

  • Standard utility allowance: Remains $878.00 per month (effective October 1, 2025), applicable where the community spouse directly pays utility charges.

  • Community spouse resource allowance: Unchanged. The greater of $32,532 or one-half of the couple's countable resources, not to exceed $162,660.

  • Home equity maximum: Unchanged at $1,130,000.

The Community Spouse Maintenance Allowance is calculated by starting with the $2,705.00 base, adding any shelter costs exceeding $811.50 (including the $878.00 utility allowance if directly paid), and then subtracting the community spouse's own gross income. The result is the amount that may be deducted from the institutionalized spouse's income before applying it to the cost of care.

The full communication, including a fact sheet with computation examples, is available here.

When Your VA Award Letter Costs You Medicaid: A New Jersey Case Study

When Your VA Award Letter Costs You Medicaid: A New Jersey Case Study

by | Jul 7, 2026 | Medicaid, Medicaid Planning, Qualified Income Trusts, Trusts

The New Jersey Appellate Division decision, A.D. v. Essex County Department of Family Services, A-2316-23 (decided May 5, 2025), illustrates how a Medicaid application for long-term care can unravel not because the applicant was ineligible, but because of confusion over income rules and missing paperwork. The case involved a resident of an assisted living facility in West Orange whose application was denied twice by the agency and twice appealed — with the Administrative Law Judge ruling in the applicant's favor both times — before DMAHS rejected those decisions and the Appellate Division affirmed the denial. The court's reasoning touches on several issues that arise regularly in NJ Medicaid applications for long-term care: what counts as income, when a Qualified Income Trust is required, and what happens when you cannot produce exactly the documentation the agency demands.

The Income Limit and the QIT Requirement

To qualify for Managed Long Term Services and Supports (MLTSS), the NJ Medicaid program that covers long-term care benefits an applicant must meet both a resource limit and an income limit. The resource limit is $2,000 in countable assets. The income limit is a gross monthly income cap, which currently stands at $2,982 per month (for year 2026). If your income exceeds that cap, Medicaid will not approve your application unless you establish and fund a Qualified Income Trust, also called a Miller Trust or QIT.

A QIT is a legal arrangement in which the applicant's total source of income above the cap is deposited into a dedicated trust account each month before being used to pay for care. The trust does not eliminate the excess income — it channels it in a way the Medicaid rules permit. If the income is over the cap and no QIT exists, the application will be denied. For more on how this works, see my post on Qualified Income Trusts in New Jersey.

In A.D., the agency determined the applicant's income exceeded the limit and required a QIT. The applicant's representative pushed back, arguing that the VA Aid and Attendance benefit included in the applicant's income is not countable for Medicaid purposes and therefore no QIT was needed. The court rejected this argument — not on the merits of whether Aid and Attendance is countable income, but because the applicant never provided the documentation the agency needed to make that determination in the first place.

The VA Award Letter Problem

This is where the case turns practical. VA pension awards can include several distinct components: a base improved pension, an Aid and Attendance supplement, a Housebound allowance, a surviving spouse award, and others. For Medicaid purposes, different components are treated differently — some are countable income, some are not. The agency cannot make that determination from a letter that shows only a total monthly benefit amount.

New Jersey has addressed this directly in Medicaid Communications 12-09 and 15-08. Under those directives, an applicant receiving VA benefits must provide either a letter that specifically identifies the dollar amount allocated to Aid and Attendance, or documentation showing that the VA has determined the applicant's unreimbursed medical expenses reduce their countable income to zero. A letter showing only a lump-sum benefit amount is not sufficient.

In A.D., the applicant provided a VA award letter that showed a surviving spouse benefit with Aid and Attendance listed, but did not break out what portion of the total was attributable to each category. The agency sent a sample letter showing the format it needed and asked for a compliant document. The applicant's representative responded that the VA does not provide a separate breakdown — and directed the agency back to the letter already on file. The agency denied the application. The court agreed: without the itemized breakdown, the application was incomplete, and the denial was not arbitrary or unreasonable.

The Resource Limit and the Timing Problem

The applicant also sought Medicaid eligibility retroactive to November 1, 2022, arguing that her bank balance on that date was below the $2,000 resource limit because a check written to the nursing facility had cleared and reduced the balance to $335.80. The agency looked at the bank statement for the following month, which showed a balance of $2,696.71. The applicant argued a second check, written in early November, had also cleared by month's end and would have brought the balance below $2,000. The bank statement did not confirm that the check cleared when claimed, and the court found no basis to disturb the agency's finding that the resource limit was not met.

The clinical eligibility piece followed the same pattern. The applicant argued that a Pre-Admission Screening request made in December 2021 should establish her clinical eligibility date, but the regulation is explicit: clinical eligibility begins on the date the screening is completed, not the date it is requested. The record showed the screening was not requested until December 29, 2022 and completed January 9, 2023. The court found no evidence to support an earlier request date.

What This Means If You Are Applying

The A.D. case is a reminder that a Medicaid application for long-term care is a documentation-intensive process with little margin for error. Several things are worth taking from it.

First, if you or a family member receives a VA pension of any kind, obtain the most detailed award letter the VA will provide before filing a Medicaid application. If the letter does not itemize the dollar amount for each benefit category — Aid and Attendance, surviving spouse benefit, Housebound allowance, and any others — request an updated letter from the VA or contact a veterans service organization for help. The agency handling the Medicaid application needs that breakdown. A general award letter will not be enough.

Second, if your gross monthly income exceeds the Medicaid income cap, a QIT must be established and funded before the application is filed. It cannot be set up after a denial and applied retroactively. The income cap and the QIT requirement are not technicalities — they are threshold eligibility conditions.

Third, if you receive a request for information from the County Social Service Agency, respond fully and on time. The agency must give you an opportunity to provide missing documents, but if you cannot supply what is requested ask for more time or provide documentary proof establishing your good faith effort to respond. For more on how to challenge a denial you believe was issued in error, see my post on contesting an arbitrary Medicaid denial in New Jersey.

Finally, be precise about timing. Resource eligibility is determined month by month based on countable assets at the beginning of each month. Pending checks, deposits, and transfers need to be documented with bank statements that actually show what cleared and when. And remember that both financial eligibility and clinical eligibility must be satisfied at the same time — meeting one without the other is not enough.

Medicaid planning for long-term care is not something to approach without preparation. The rules governing income, resources, and documentation are detailed, and mistakes are difficult to correct after the fact. If you are in the five-year lookback period and considering a Medicaid application, see my overview of the five-year lookback rule in New Jersey for background on how prior transfers can affect eligibility.

When a Spouse Won’t Cooperate: The Medicaid Spousal Waiver in New Jersey

When a Spouse Won’t Cooperate: The Medicaid Spousal Waiver in New Jersey

by | Jun 16, 2026 | Medicaid, Medicaid Planning

Applying for Medicaid to cover nursing home care requires disclosing financial information not just for the applicant, but for the applicant’s spouse as well. That requirement makes sense when both spouses are willing to participate. It becomes a serious problem when the spouse living at home — known in Medicaid terms as the “community spouse” — refuses to provide that information, or simply cannot.

A New Jersey appellate decision illustrates exactly how this problem plays out, and what an applicant can do about it.

The Two Spouses in a Medicaid Application

When one spouse needs nursing home care and applies for Medicaid, that spouse is the “institutionalized spouse.” The spouse remaining at home is the “community spouse.” Federal and New Jersey Medicaid rules require the agency to assess both spouses’ combined resources, even though only one spouse is applying for benefits. This is meant to prevent asset-shifting between spouses, but it also means the community spouse’s bank records, income, and other financial information become part of the application.

Most of the time, both spouses cooperate and the process moves forward. But what happens when the community spouse won’t provide that information — whether out of refusal, illness, age, or simply being overwhelmed?

The Spousal Waiver and Spousal Refusal

Federal Medicaid law, 42 U.S.C. § 1396r-5, addresses this exact scenario in two related ways. The first is spousal refusal. Under the statute, if a community spouse refuses to make their income or resources available to the institutionalized spouse, the institutionalized spouse can still be found eligible, provided the institutionalized spouse assigns to the state any right of support from the community spouse. In other words, the applicant transfers to the state whatever legal right they would otherwise have to seek support from their spouse, and the state can then pursue the community spouse directly for reimbursement of the cost of care. The eligibility determination itself proceeds without counting the community spouse’s resources.

Second, and separately, the statute allows the state to waive its resource assessment when denying eligibility would otherwise impose an “undue hardship” on the institutionalized spouse. This is the provision New Jersey’s Division of Medical Assistance and Health Services (DMAHS) has applied in practice when a community spouse is uncooperative, but DMAHS has historically construed this waiver narrowly — generally limiting it to cases involving a documented break in the marriage, an unverifiable death or divorce, or a community spouse whose whereabouts are unknown.

That narrow approach was tested directly in N.S. v. Division of Medical Assistance and Health Services, an unpublished Appellate Division decision from 2019.

What Happened in N.S.

N.S. was an 87-year-old man admitted to a nursing facility. Before his admission, he had lived with his wife, who was 86. His daughter, acting as his authorized representative, applied for Medicaid on his behalf and began the lengthy process of gathering financial documentation — a process that dragged on for months as the county welfare agency made repeated, sometimes inconsistent, requests for records.

The daughter ran into a wall when it came to her stepmother’s financial information. The wife was elderly, in poor health, and became distressed every time she was asked for documents. She told her stepdaughter to stop asking. The nursing facility sent her three separate letters requesting the information; she did not respond to any of them. The county agency sent three more letters directly. Still no response.

The nursing facility’s attorney requested a spousal waiver, arguing that denying benefits because of the wife’s refusal to cooperate would work an undue hardship on N.S. The county agency disagreed, reasoning that because the couple had been living together and there was no evidence of a broken marriage, the waiver did not apply. N.S.’s application was denied. Both spouses died within months of each other — the wife in October 2016, N.S. in November 2016 — before the matter was resolved.

An administrative law judge upheld the denial, and DMAHS adopted that decision. The case went to the Appellate Division.

The Appellate Division’s Ruling

The court reversed. It found that DMAHS had applied an overly narrow standard by treating “estrangement” as essentially the only basis for a hardship waiver, without pointing to any regulation or formal guidance requiring that result. The court noted that DMAHS had never adopted regulations specifically interpreting the undue hardship provision — it was relying on an unwritten internal practice.

More importantly, the court held that an undue hardship determination has to be a fact-sensitive inquiry that considers the totality of the circumstances. In this case, the unrebutted facts were that the wife was elderly, in poor health, had asked her stepdaughter to stop asking for information because it was making her sick, and had not responded to six separate written requests from two different sources. There was no evidence that anyone was gaming the system to shield the wife’s assets. The agency, the court found, ignored all of this and focused exclusively on the fact that the couple had been living together before N.S. entered the nursing home — a single fact that does not, by itself, rule out hardship.

The court also found that the agency’s separate basis for denial — that N.S. himself had failed to provide his own financial records — was not supported by the record. The daughter had, in fact, provided the requested information; the agency’s own correspondence simply failed to track what had already been submitted.

The court reversed the denial and directed the agency to process the application without regard to the wife’s resources.

What This Means If You’re Applying

If you are applying for Medicaid on behalf of a spouse and the community spouse won’t or can’t provide financial information, do not assume the application is doomed. Document everything. Keep copies of every letter and email sent to the community spouse requesting information, and keep records of any response — or lack of one. If the community spouse’s refusal stems from health issues, cognitive decline, or sheer distress, get that documented too, ideally through a treating physician or a written account from someone who witnessed it.

Request a spousal waiver in writing and be explicit about the basis: cite the hardship that denial would create for the institutionalized spouse, not just the community spouse’s general unwillingness. And if the county agency denies the request based solely on the fact that the couple wasn’t estranged, know that DMAHS’s position on this issue has been challenged and rejected by an appellate court.

Spousal refusal and the hardship waiver are both narrow tools, and DMAHS does not apply them generously. An elder law attorney can help determine which approach fits your situation and how to build the record needed to support it.