When Daniel's father was diagnosed with Parkinson's disease, Daniel cut back his hours at work and moved into the family home to care for him. He cooked meals, helped his father bathe and dress, drove him to medical appointments, and sat up with him on the bad nights. Every month, his father wrote him a check for $2,000. Nobody in the family thought twice about it. The care was real, the need was obvious, and the payment simply recognized what Daniel was giving up to provide it.
Two years later, Daniel's father entered a nursing home and applied for Medicaid. The county welfare agency pulled five years of bank statements, found $48,000 in checks written to Daniel, and treated every dollar as a gift. The result was a transfer penalty — months of Medicaid ineligibility imposed at the precise moment the family could least afford to pay for care privately.
This is one of the most punishing and most avoidable mistakes in Medicaid planning. New Jersey law does not prohibit paying a family member to provide care. But it does presume — aggressively — that money paid to a relative without a written agreement in place beforehand was a gift, not compensation. Overcoming that presumption after the fact is extraordinarily difficult. This post explains the rule, the presumption, and the written caregiver agreement that solves the problem.
Informal Payments Are Presumed Gifts
The governing New Jersey regulation, N.J.A.C. 10:71-4.10, contains a provision aimed squarely at this situation. It provides that when a transfer is "intended to compensate a friend or relative for care or services provided in the past," any care "provided for free at the time [it was] delivered shall be presumed to have been intended to be delivered without compensation." In plain terms: if no agreement to pay existed when the care was provided, the regulation treats the care as having been provided for free — and treats the later payment as a transfer for no compensation. N.J.A.C. 10:71-4.10(b)(6)(ii).
That presumption can be rebutted, but only with "credible documentary evidence preexisting the delivery of the care or services indicating the type and terms of compensation." Notice what that requires. The documentation must exist before the care begins, and it must spell out what the caregiver will do and what the caregiver will be paid. A handshake understanding, a family consensus, or a written agreement drafted a year into the arrangement does not satisfy this standard.
The regulation adds a second constraint that surprises many families: the compensation "shall not be greater than the prevailing rates for similar care or services in the community," and any amount above the prevailing rate "shall be considered to be uncompensated value." Simply agreeing to paying a daughter $500.00 an hour for companionship and light housekeeping does not make the payment legitimate — the amount above fair market value is treated as a gift regardless of what the family agreed to.
The Legal Framework Behind the Presumption
The federal statute, 42 U.S.C. § 1396p(c)(1)(A), requires state Medicaid plans to impose a period of ineligibility when an institutionalized individual "disposes of assets for less than fair market value" during the 60-month lookback period. New Jersey implements that mandate through N.J.A.C. 10:71-4.10, which adds a procedural feature families need to understand: every transfer within the lookback period is presumed to have been made to obtain earlier Medicaid eligibility than the applicant would otherwise be entitled to. N.J.A.C. 10:71-4.10(i).
The applicant can rebut that presumption, but the standard is demanding — "convincing evidence that the assets were transferred exclusively (that is, solely) for some other purpose." N.J.A.C. 10:71-4.10(j). "Exclusively" is doing heavy work in that sentence. If the county believes even part of the motivation was accelerating Medicaid eligibility, the rebuttal fails.
📊 Example Calculation: Take the $48,000 in undocumented caregiver payments from the opening scenario. Penalty Period = $48,000 ÷ $420.67 (New Jersey's daily penalty divisor, effective April 1, 2026) = approximately 114 days of Medicaid ineligibility. During those 114 days, the applicant must pay for long-term care entirely out of pocket — after already spending down to the $2,000 asset limit.
What a New Jersey Court Did With Documented and Undocumented Caregiver Payments
The distinction between documented compensation and undocumented transfers is not theoretical. In E.C. v. Division of Medical Assistance and Health Services, No. A-0832-17T4 (N.J. Super. Ct. App. Div. Mar. 25, 2019) (unpublished), a 103-year-old Medicaid applicant had paid a caretaker $150 per week in cash — $3,600 total — for housekeeping, meal preparation, bathing, and toileting assistance provided from December 2014 through May 2015. The administrative law judge found the caretaker's testimony about those services credible, and that $3,600 was excluded from the transfer penalty.
Everything else was penalized. Additional amounts the caretaker claimed to have spent on the applicant's behalf — groceries, household items, podiatrist visits — were treated as uncompensated transfers because no receipts were produced at the hearing. An affidavit submitted after the hearing, unsupported by bank records, was rejected as not credible. And $12,510 claimed for caretaking services provided after the applicant entered the nursing home was disallowed. The agency's director adopted the decision, and the Appellate Division affirmed.
The lesson of E.C. is blunt: New Jersey's system rewards documentation and punishes its absence. Credible, specific evidence of services actually performed at a reasonable rate survived. Approximations, after-the-fact affidavits, and payments for care the nursing facility was already providing did not.
A Written Caregiver Agreement
A caregiver agreement — sometimes called a personal care agreement or personal services contract — is a written contract between the person receiving care and the person (who may be a family member) providing it. When properly structured, it converts what the regulation would otherwise presume to be a gift into documented compensation for services at fair market value. The regulation itself tells you what the agreement must contain to survive scrutiny:
It must be in writing and signed before care begins. This is the single most important requirement. The regulation demands documentary evidence "preexisting the delivery of the care or services indicating the type and terms of compensation." An agreement drafted after months of caregiving cannot retroactively recharacterize free care as compensated care.
It must describe the specific services, schedule, and rate. The agreement should state what the caregiver will do (bathing, dressing, meal preparation, medication supervision, transportation, overnight supervision), how many hours per week, and the hourly rate. Vague descriptions invite the county to question whether the services were actually worth the payment.
The rate must not exceed prevailing community rates. The rate of pay cannot exceed fair market value. Whatever the rate agreed upon, it must be supportable — the portion above the prevailing rate is uncompensated value, dollar for dollar.
Payment should track the services as they are performed. Paying the caregiver on a regular schedule — weekly or biweekly, by check or traceable transfer — looks like compensation. A single lump-sum prepayment for years of future care looks like a transfer, and it invites the county to treat it as one.
The services must be real, needed, and documented. A care log recording the dates, hours, and tasks performed each week is the documentary backbone of the arrangement. It is also worth obtaining a physician's written statement that the person needs assistance with daily activities — while the regulation does not expressly require it, it substantially strengthens the "credible documentary evidence" the regulation calls for.
The caregiver should report the income. Payments under a caregiver agreement are generally taxable income to the caregiver. Reporting the income is both a tax obligation and further evidence that the arrangement was genuine compensation rather than a disguised gift. Consult a tax professional for the specifics.
Common Mistakes That Sink Caregiver Agreements
Even families who understand the concept routinely make errors that render their agreements worthless:
Backdating the agreement. An agreement signed today but dated six months ago — or drafted after the Medicaid application is already contemplated — fails the regulation's requirement that the documentation preexist the care. A backdated agreement is not a plan; it is evidence of the problem.
Lump-sum prepayment. Paying $60,000 up front for "three years of future care" asks the county to accept on faith that the services will be performed. Pay as the care is delivered.
Vague duties. "Assist as needed" does not establish what was done or how the payment was calculated. Define the tasks and schedule.
No care logs. A contract proves an agreement existed; it does not prove the caregiver actually performed 30 hours of work in a particular week. Keep contemporaneous records.
Above-market rates. The excess over the prevailing rate is uncompensated value by regulation, no matter what the family agreed to.
Cash with no paper trail. The E.C. case is the cautionary tale: the documented $3,600 survived; the undocumented amounts did not.
Paying for care the facility provides. Once the person is in a nursing home, paying a relative for the same personal care the facility is already delivering will not be treated as fair-market compensation, as E.C. demonstrates.
Final Thoughts
A caregiver agreement is one of the simplest documents in elder law and one of the most consequential. It costs little to prepare and it protects two things at once: it fairly compensates the family member who sacrifices time and income to provide care, and it prevents that compensation from being recharacterized as a gift that triggers months of Medicaid ineligibility. But the protection only exists if the agreement is in place before the first hour of care is delivered. Once the payments have been made without one, the regulation's presumption does the rest.
Many New Jersey families are surprised to learn that qualifying for Medicaid Long-Term Services and Supports (MLTSS) depends not only on income but also on how retirement assets are classified. A pension, IRA, 401(k), 403(b), annuity, or other retirement account can dramatically affect Medicaid eligibility, though not always in the way people expect. Understanding how these assets are treated is critical if you are planning for nursing home care, assisted living, or home-based long-term care through New Jersey's MLTSS program.
Understanding MLTSS Financial Eligibility
MLTSS is New Jersey's Medicaid program that helps pay for long-term care services in nursing homes, assisted living facilities, and at home. To qualify, an applicant must first meet the program's clinical (level-of-care) requirements and then satisfy both an income test and a resource (asset) test. For 2026, a single applicant generally may have no more than $2,982 per month in gross income and no more than $2,000 in countable resources. The income test and the resource test are separate issues and should not be confused with one another.
What Happens If Your Income Is Over the Medicaid Limit?
Medicaid requires applicants to disclose virtually all sources of income, including Social Security retirement benefits, pensions, IRA distributions, annuity payments, employment income, veterans' benefits, and other recurring payments.
Many people assume that earning more than the monthly income limit automatically disqualifies them from Medicaid. In New Jersey, that is not necessarily true. For individuals whose gross monthly income exceeds the limit, eligibility may still be achieved through a Qualified Income Trust (QIT), often called a Miller Trust. A QIT allows excess income to be deposited into a specially drafted trust account each month. As long as the trust is properly established and administered, the income deposited into it is generally not counted against the applicant for eligibility purposes.
This is particularly important for retirees who receive income from multiple sources, such as Social Security, pensions, and Required Minimum Distributions (RMDs) from retirement accounts. In many cases, individuals who appear financially ineligible at first glance can still qualify for MLTSS through proper use of a QIT. Read more about QITs here.
However, qualifying for Medicaid does not mean you keep all of your income. Once approved, most of the recipient's monthly income must generally be contributed toward the cost of care, subject to certain allowances and deductions. This amount is commonly referred to as the beneficiary's cost share or patient pay amount.
Because income calculations can be complex, especially when retirement accounts, spousal income, annuities, or trust distributions are involved, families should have their eligibility reviewed before assuming that excess income prevents them from qualifying.
Understanding the Resource Test
Countable resources generally include the principal balances of:
Checking and savings accounts
Certificates of deposit
Stocks and bonds
Investment accounts
Cash surrender value of certain life insurance policies
Real estate other than the principal residence
Retirement accounts
A second automobile
Some assets are exempt, including:
A primary residence in qualifying circumstances
One vehicle
Personal belongings
Irrevocable prepaid funeral arrangements
Certain burial funds
Are IRAs and 401(k)s in Payout Status Countable for NJ Medicaid?
The short answer is yes. Unlike some other states with more generous rules, New Jersey treats an IRA, 401(k), 403(b), or similar retirement account as a countable resource for Medicaid purposes, even if the account is in payout status. The account will usually have to be liquidated and spent down before eligibility can be established. This comes as a shock to many retirees, who assume these accounts are protected because they receive favorable tax treatment and shelter from certain creditors. That protection does not extend to Medicaid eligibility. Medicaid is a needs-based program, and the State expects applicants to use their own resources to pay for long-term care before the program steps in.
This is a separate issue from the income rules discussed above. Distributions from the account are generally treated as income, while the principal balance is treated as an available resource. As a result, even a single retirement account can affect both the resource limit and the income limit.
How Pensions Are Treated
Defined-benefit pensions are generally treated differently from retirement accounts holding an accumulated balance. A monthly pension payment is typically considered income rather than a resource. For example, if a retired teacher receives a $1,500 monthly pension, Medicaid generally views those payments as income. The pension itself is not an asset that can be liquidated and spent down in the way an IRA or 401(k) can. The same principle applies to Social Security retirement benefits and many government pensions.
Married Couples Receive More Protection
A single Medicaid applicant may have no more than $2,000 in countable resources. The rules are more complicated for married couples. When only one spouse requires long-term care, Medicaid is designed to prevent the healthy spouse, often called the "community spouse," from becoming impoverished. The community spouse is entitled to keep a portion of the couple's countable assets under the Community Spouse Resource Allowance (CSRA).
In 2026, the community spouse may retain up to $162,660 in countable resources, while the spouse applying for Medicaid remains limited to $2,000. Importantly, the CSRA is not based simply on whose name appears on an account. Medicaid looks at the couple's combined countable assets as of a "snapshot date" and then determines how much the community spouse may retain. In general, that amount is one-half of the combined total, subject to a minimum and a maximum that are adjusted annually. We will cover the calculation in more detail in a future post.
In addition to resource protections, the community spouse may be entitled to a portion of the institutionalized spouse's income if needed to meet living expenses. This protection, known as the Minimum Monthly Maintenance Needs Allowance (MMMNA), can be critical when the healthy spouse has limited income of his or her own.
What About Required Minimum Distributions?
Many retirees receive RMDs from their retirement accounts. The fact that an account is paying RMDs does not exempt it from Medicaid in New Jersey. Each distribution is generally counted as income when received, and the remaining account balance is counted as a resource.
Liquidating a retirement account to meet the resource limit can trigger significant income tax consequences. Anyone in this situation should consult an accountant in addition to an attorney before taking action.
The Five-Year Look-Back Period
One of the most common mistakes families make is giving away assets shortly before applying for Medicaid. New Jersey applies a five-year look-back period, during which Medicaid reviews transfers made for less than fair market value.
If Medicaid discovers gifts, transfers to children, or other below-market transfers during the look-back period, it may impose a penalty period. During that time, the applicant may be financially eligible but still unable to receive Medicaid benefits. The look-back applies not only to bank accounts but also to retirement assets and other property interests. Before transferring a retirement account, cashing out a 401(k), gifting IRA assets, or moving funds to family members, it is important to understand the potential consequences. Read more about the 5-Year Lookback here.
Asset Preservation Strategies
The good news is that Medicaid planning is not limited to giving assets away. Many lawful strategies can preserve assets while helping families prepare for future care needs. Depending on the circumstances, planning may include:
Creating irrevocable trusts well in advance of anticipated care needs
The most effective strategy is often early planning. When a family begins planning more than five years before long-term care is needed, significantly more options are usually available. Waiting until a health crisis arises often limits those options and increases financial risk.
The Bottom Line
Retirement accounts do not receive an exemption under New Jersey Medicaid rules. The account balance counts as a resource, and distributions from the account count as income.
An IRA, 401(k), 403(b), pension, annuity, or other retirement assets may affect eligibility differently depending on whether the applicant is single or married and whether distributions are being received. Because retirement assets can affect both the income and resource tests, careful planning is essential. The best time to address Medicaid planning is before a crisis occurs. Families who plan early often have significantly more opportunities to preserve assets, protect spouses, and qualify for the long-term care benefits they may eventually need.
When a nursing home resident applies for Medicaid in New Jersey, someone often needs to help with the application and appeal process. But who can act for the applicant, and when is a Designated Authorized Representative (DAR) form required?
Those questions were at the center of E.B. v. Division of Medical Assistance and Health Services, 431 N.J. Super. 183 (App. Div. 2013), a case that remains highly relevant for Medicaid applicants, nursing facilities, and elder law attorneys today.
The Facts of the Case
The case involved two nursing home residents who had been approved for Medicaid but wished to challenge adverse determinations through fair hearings. Their nursing facilities, acting on their behalf, requested appeals regarding Medicaid penalty periods and other issues.
The nursing homes’ attorney submitted hearing requests. However, the attorney expressly stated that he represented the nursing facilities, not the Medicaid applicants themselves. The Division of Medical Assistance and Health Services (DMAHS) responded by requiring completion of its Medicaid Designation of Authorized Representative (MDAR) form before proceeding with the appeals. The facilities refused and instead submitted their own authorization forms. DMAHS rejected those forms and would not schedule the hearings. The nursing facilities argued that DMAHS could not require use of the MDAR form. The Appellate Division disagreed.
The Court's Holding
The court upheld DMAHS's authority to require a standardized authorized representative form. It found that the MDAR requirement was consistent with federal and state Medicaid law and helped protect applicants by ensuring that the person acting on their behalf was properly authorized. The court specifically held that DMAHS's requirement that Medicaid applicants use the MDAR form did not violate federal law, did not interfere with fair hearing rights, and was a reasonable measure to protect applicants and the integrity of the Medicaid program.
Why the DAR Form Matters
From a practical standpoint, this case highlights a lesson I regularly encounter in Medicaid cases: if someone other than the applicant is acting on the applicant's behalf, a completed DAR form can prevent unnecessary delays. Counties and DMAHS often refuse to discuss eligibility issues, process appeal requests, or release information unless they have proper authorization in their files. When a DAR form is missing, the result can be avoidable delays in an already time-sensitive Medicaid application. This is particularly important in long-term care Medicaid cases, where delays can affect nursing home reimbursement and create significant stress for families.
One of the most significant parts of the decision is something many county welfare agencies improperly overlook or ignore. The attorney in E.B. did not represent the Medicaid applicants. He represented the nursing facilities. That distinction drove the outcome. The court noted that the problem arose because the attorney sought a hearing "on behalf of the respective Facility." The court explained:
Had counsel requested the fair hearings in their capacity as the plaintiffs' legal representative, we suspect that this matter would not have caused the CWA any concern.
The court also discussed DMAHS's proposed rule (which is still not formally adopted), which expressly provided:
Use of the Division's Designation of Authorized Representative Form is not required if the authorized representative is the beneficiary's legal guardian, a relative by blood or marriage, the attorney of the beneficiary hired by the beneficiary to represent the beneficiary, or a person with power of attorney for the beneficiary.
In other words, when an attorney actually represents the Medicaid applicant, a DAR form generally should not be required.
The Real-World Problem: Counties Sometimes Get This Wrong
Despite the language discussed in E.B., I still see situations where county agencies request a DAR form from an attorney who already represents the Medicaid applicant. That request is often unnecessary. An attorney retained by the applicant stands in a different position than a nursing facility, its employees, or another third party attempting to act for the applicant. The entire point of the attorney exception is that counsel already has authority through the attorney-client relationship. Unfortunately, the rules are applied inconsistently. As a result, attorneys sometimes need to explain the distinction and push back.
The Takeaway
The lesson from E.B. v. DMAHS is straightforward: make sure the proper authorization documents are in place before problems arise. If a nursing facility, family member, friend, or other third party will be communicating with the county welfare agency or DMAHS, a completed DAR form can prevent delays and disputes.
At the same time, applicants should understand that attorneys who directly represent the Medicaid applicant are treated differently. The key distinction in E.B. was that the lawyer represented the facility, not the Medicaid applicant. Getting this right can mean the difference between a smooth Medicaid process and months of unnecessary delay.
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.
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.
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.
