Medicaid is on the Chopping Block Again: Who Will Be Impacted in New Jersey?

by Jose D. Roman | Mar 6, 2025 | Medicaid, Medicaid Planning

Since President Donald J. Trump’s re-election, discussions about the future of Medicaid have intensified. In January 2025, the Trump administration temporarily paused federal financial assistance—sparking widespread uncertainty about Medicaid funding. Although the order was later rescinded, concerns over potential funding disruptions remain.

In February 2025, House Republicans narrowly passed a budget resolution proposing $4.5 trillion in tax cuts paired with $2 trillion in spending reductions over the next decade. Notably, the budget includes $880 billion in cuts to Medicaid, a figure that has ignited debates, even within the GOP. And let’s be clear in case you hear anyone saying Medicaid is safe – the nonpartisan Congressional Budget Office has stated that Republicans cannot meet their $880 billion target without resorting to drastic cuts to Medicaid. To understand what’s at stake, let’s examine how Medicaid is structured in New Jersey.

What Is Medicaid?

Medicaid is a joint federal and state program that offers free or low-cost health coverage to eligible low-income individuals and families. It covers a broad range of services—from doctor visits and hospital stays to prescription drugs, preventive care, mental health services, and long-term care. Each state administers its own Medicaid program within federal guidelines, which means eligibility requirements and covered services can vary. Medicaid primarily serves very low-income adults, children, pregnant women, seniors, and individuals with disabilities, ensuring that vulnerable populations have access to essential healthcare. In New Jersey, Medicaid is divided into several programs, each targeting specific groups and each with their own eligibility criteria.

A. NJ FamilyCare Medicaid

NJ FamilyCare is a Medicaid program that provides free or low-cost coverage to eligible New Jersey residents under age 65. It includes Medicaid, the Medicaid expansion under the Affordable Care Act (New Jersey is one of the states that has opted in by accepting federal funding), and the Children’s Health Insurance Program (CHIP). The expansion Medicaid component is widely expected to be targeted for cuts because it includes the often unfairly maligned Affordable Care Act Medicaid – the “Obamacare” expansion of Medicaid.

• Who Does NJ FamilyCare Medicaid Cover?

Adults aged 19 to 64 can access NJ FamilyCare if their household income is at or below 138% of the Federal Poverty Level/FPL (133% plus a 5% income disregard). This is incredibly low and many adult minimum wage workers find themselves ineligible for Medicaid. For example this is a mere $21,597 per year for an individual and $44,367 for an adult living in a household of four. Pregnant people and children have more generous eligibility limits at 205% FPL for pregnant people and up to 355% FPL for children. These categories all fall under the umbrella of Modified Adjusted Gross Income (MAGI) Medicaid and only consider income, not assets when determining eligibility. Therefore, anyone of working age who abruptly loses their income can apply and receive health coverage without consideration of their assets such as retirement savings.

• Who Will Be Impacted When NJ FamilyCare is Cut?

The answer is simple. Pregnant women, children and low wage-earning adults who don’t have access to or cannot reasonably afford high-cost employer sponsored coverage will take the brunt of the impact.  

B. SSI Medicaid and “Medicaid Only”

Individuals in New Jersey who qualify for Supplemental Security Income (SSI) benefits (a basic income support program) are automatically enrolled in Medicaid ensuring that they have access to health coverage. In addition, the “Medicaid Only” program extends coverage to individuals who have income and resources under the SSI limits but don’t actually receive SSI payments.

• Who Does SSI Medicaid and Medicaid Only Cover?

SSI is a program that provides income support to seniors 65 and over, blind individuals, and disabled individuals who have zero or very low income. For 2025, eligible individuals with countable income below $967 per month and $2,000 or less in assets can qualify for SSI payments. For a couple the figures are $1,450 per month and $3,000 in assets. Essentially these are individuals with almost nothing in terms of basic income and assets who are living month to month.

• Who Will Be Impacted When SSI Medicaid and Medicaid Only is Cut?

The answer is pretty straightforward, though depressing. Seniors and individuals who have been found to meet the federal government’s standards for blindness and permanent disability, who have zero or very little income. Essentially the poorest senior citizens and the poorest individuals with disabilities may find themselves without access to essential health coverage when SSI Medicaid and Medicaid Only is cut. 

C. Disabled Adult Child (DAC) Medicaid

Disabled Adult Child (DAC) Medicaid is specifically targeted toward individuals with disabilities, whose condition began before age 22. It allows them to retain Medicaid benefits even when their income suddenly exceeds SSI eligibility parameters.

• Who Does DAC Medicaid Cover?

Essentially the program allows individuals with disabilities, whose condition began before age 22, to maintain Medicaid coverage even if they become ineligible for SSI or Medicaid Only due to receiving Social Security Disability Insurance (SSDI) benefits based on a parent’s earnings record. This situation typically arises when a parent retires, becomes disabled, or passes away, triggering SSDI benefits for the adult disabled child. While the increase in income from SSDI may disqualify the individual from SSI, federal law ensures the continuation of Medicaid benefits for those who were previously eligible under SSI but have lost it due to SSDI benefits. This safeguard is crucial, as Medicaid often covers services and supports not provided by Medicare or private insurance, ensuring that individuals with disabilities continue to receive necessary care without interruption.

• Who Will Be Impacted When DAC Medicaid is Cut?

DAC Medicaid primarily benefits individuals with developmental and intellectual disabilities. However, since it impacts anyone whose condition began before the age of 22 it includes a wide variety of individuals struggling with physical, intellectual or mental disabilities. It’s sad but true – when this program is cut it will impact adult disabled individuals who have relied on Medicaid for most of their life.

D. Aged Blind Disabled (ABD) a/k/a Special Medicaid Program

In New Jersey, the Aged, Blind, and Disabled (ABD) Medicaid program, also known as Special Medicaid, provides supplemental healthcare coverage to seniors and individuals with disabilities who receive Medicare benefits. The program pays Medicare premiums, covers Medicare co-pays and deductibles, and offers services not covered by original Medicare Part A and B such as dental coverage. 

• Who Does ABD/Special Medicaid Cover?

The program is open to low income individuals who are 65 years or older, blind or disabled and also receive Medicare. The income limits for ABD Medicaid are based on the Federal Poverty Level (FPL). As of 2025, the income limit is 100% of the FPL, which is $1,304 for an individual and $1,763 for a married couple. The program also has asset limits:  for individuals, the limit is $4,000, and it is $6,000 for couples. 

• Who Will Be Impacted When ABD/Special Medicaid is Cut?

Retired seniors with low income who are living month to month on social security will be impacted significantly. Essentially this will punish retired individuals who worked in low wage jobs.  It will also impact low income blind and disabled individuals who receive Medicare. It is sad as these individuals living off of less than $2000 per month will now need to figure out how to pay additional healthcare expenses, including Medicare premiums, co-pays and deductibles, and essential non-covered services such as dental and home health aides. Many will forego essential medical care altogether due to the cost.

E. NJ Workability

NJ WorkAbility is a program that enables employed individuals with disabilities to obtain comprehensive Medicaid coverage. The program has generous limits compared to other Medicaid programs. Essentially it was designed to encourage individuals with disabilities to work without fear of losing their health insurance.

• Who Does NJ WorkAbility Medicaid Cover?

Eligibility for NJ WorkAbility Medicaid was recently expanded and is now relatively simple. You must be a New Jersey resident, have a disability determination by the Social Security Administration or the State, and have proof of employment. The program does not specify a minimum number of work hours or earnings to qualify, so even individuals with small part-time or irregular jobs can qualify as long as there is proof of employment. The program does not have an asset limit and does not count a spouse’s income. People with countable income above 250% FPL may have to pay a premium on a rising scale.

• Who Will Be Impacted When NJ WorkAbility Medicaid is Cut?

Working individuals with disabilities will lose insurance or have increased insurance and healthcare costs when NJ WorkAbility is cut. This is unfortunate, especially when the people advocating for Medicaid cuts often claim that Medicaid recipients choose not to work so they can keep public benefits. 

F. Managed Long Term Services and Supports (MLTSS) Medicaid

Managed Long Term Services and Supports (MLTSS) is a New Jersey Medicaid program designed to provide comprehensive long-term care services to individuals who require assistance due to age, disability, or chronic illness. MLTSS covers services beyond those offered by standard Medicaid, including nursing home care, home and vehicle modifications, home-delivered meals, and assisted living services.

• Who Does MLTSS Medicaid Cover?

Because Medicare does not cover long term care such as nursing home care, qualifying for Medicaid is typically the only way most people can pay for these services. However, this program is extremely complicated, and many individuals hire a lawyer when applying for the program. The application process includes a “five-year lookback,” which is a detailed examination of the income and assets of the applicant and their spouse in the prior 60-month period. To be eligible, an individual applicant’s monthly income must not exceed $2,901 (2025) and countable assets are limited to $2,000. The application process includes looking at a married couples combined assets even if they are not jointly owned. The application often will need to spend down assets in order to meet the $2000 limit. The non-applicant spouse may also need to spend down assets because the amount he or she can retain is limited to between $31,584 and $157,920. These guidelines are meant to ensure that poor and middle-class individuals have access to essential long-term care services while maintaining some financial stability.

• Who Will Be Impacted When MLTSS Medicaid is Cut?

With nursing care often costing in excess of $10,000 per month MLTSS Medicaid and similar programs throughout the county has become the backbone of our long term care system. Any cuts to this program will cause significant disruption to people in need of nursing home, assisted living or similar services at home.

Final Thoughts

The proposed Medicaid cuts could have far-reaching consequences for some of our most vulnerable citizens. In New Jersey, each Medicaid program serves a critical role—from providing essential coverage to low-income adults, pregnant individuals, and children to supporting seniors and those with disabilities. Drastic reductions in Medicaid funding would not only undermine healthcare access but also exacerbate financial insecurity for many families.