With a combined 50 years of experience at my divorce law firm here in New Jersey, our attorneys often get involved in matters that involve not only young couples, but older ones as well. This is due to “Baby Boomer” (please see my video below), as a lawyer I am then tasked with dealing with additional issues that should be considered by every attorney that is handling a divorce for an elder couple, including how Medicaid, Medicare and Veterans’ Benefits can be affected by the divorce and the support provided to a party.
Generally speaking, Medicare is for individuals who are over sixty-five (65) years old and provides them with medical coverage if they are disabled. This typically does not cover nursing homes or assisted living facilities. Medicaid is a poverty program that deals with medical and housing. In order to qualify for same, you must meet certain criteria, including but not limited to having less than $2,000 in assets and a monthly income of less than $2,199, otherwise you must have a Qualified Income Trust. You should also be mindful that they will look back five (5) years.
As for Veterans’ Benefits, you must be sixty five (65) years old or older to qualify, unemployable, have been honorably or generally discharged, have ninety (90) days of active Federal duty with at least one (1) day during an official period of conflict, have a medical necessity that requires care and a maximum income of between $12,868 and $34,050. The maximum monthly benefit amounts one can receive are as follows: (i) for two (2) Veteran spouses $2,837; (ii) for a married Veteran $2,120; (iii) for a single Veteran $1,788; and (iv) for a surviving spouse $1,149. In addition, your liquid assets must generally be less than $80,000, however, you can set up certain trusts, annuities and gifts to reduce the amount of liquid assets. You should be careful, however, as there is a three (3) year look back period (none for transfers). This is less than the five (5) year look back for Medicaid. Lastly, income from Veterans’ Benefits is not taxable.
In comparing Medicaid to Veterans’ Benefits, one may be able to qualify for Veterans’ Benefits and not Medicaid, however, you can also qualify for both, but Veterans’ Benefits are often treated as income, which will reduce or eliminate Medicaid. Furthermore, if you are already on Medicaid, then your Veterans’ Benefits will be limited to $90.00 per month.
In addition, there are many instances where family and elder law interact. You must be mindful of same. A spouse’s assets are at risk, including retirement savings. Medicaid disregards pre-nuptial and mid-marriage agreements. You should consider the pros and cons of entering into a marital settlement agreement and divorce both before and after your Medicaid application to determine which is best. As an attorney you should review with your client whether Medicaid planning is applicable, considering what ramifications a couple’s or individual’s net assets might have on same if they are substantial. You should also consider long-term care insurance and whether it should be part of a divorce agreement.
Some other areas where family and elder law may interact include disability, alimony and special needs trusts. There can be first party and third party trusts. You need to look at the key conditions of same, including whether it is nontaxable and will it get the court’s approval. You should also be mindful of discretionary trusts, a child’s disability and child support.
These areas can also interact in equitable distribution. There is case law that holds that there is a rebuttable presumption of an improper motivation to obtain Medicaid eligibility. By way of example, in a situation where there is a 60/40 distribution of assets in lieu of alimony would be okay, with the institutionalized spouse having to spend down $250,000, some of which would be put into a special needs trust with the tax consequences taken into consideration.
The above are just a few things to consider when an elder couple is considering and/or going through a divorce. Many individuals often forget to consider same when going through this tough process in their life. As practicing New Jersey divorce attorneys we deal with these types of issues on a reoccurring basis and are mindful of same when it comes to our individual client’s needs.
If you are going through a divorce or have questions concerning Medicaid, Medicare or Veterans’ Benefits, do not hesitate to contact our firm to further discuss your rights and how we can help you maximize your benefits.