Is My Parent Eligible for Medicaid? What Families in New Jersey Need to Know

Nursing home care in New Jersey costs roughly $12,000 to $14,000 per month in 2026. Most families exhaust their savings within 18 to 24 months of paying privately. At that point, Medicaid becomes the only realistic option — and most families have never looked closely at whether their parent actually qualifies, or what it takes to get there.

Medicaid eligibility for long-term care in New Jersey is not automatic, and it is not simple. The rules around income, assets, and what counts toward the limits are specific, frequently misunderstood, and consequential enough that getting them wrong delays care and costs families money they do not need to spend.

FREE WEBINAR

5 Things to Know About

Estate Planning

When You Turn Sixty-Five

Save the Date

Friday, Sep 18^th at 2:30pm

What New Jersey Medicaid for Long-Term Care Actually Is

Medicaid is a joint federal and state program that covers health care costs for people with limited financial means. For families navigating aging parents and nursing home costs, the relevant program is long-term care Medicaid — specifically, New Jersey’s Institutional Medicaid for nursing home residents and the Managed Long-Term Services and Supports program, which covers in-home and community-based care for those who qualify.

This is different from the Medicaid most people think of when they hear the word. Regular Medicaid covers doctor visits and prescriptions. Long-term care Medicaid covers the ongoing cost of a nursing home stay or structured in-home support — expenses that can run well into six figures annually and that Medicare does not cover beyond the first 100 days.

Qualifying for long-term care Medicaid in New Jersey requires meeting three separate tests: income, assets, and level of care. A person must need a nursing-home level of care, fall within the income limits, and have assets below the program’s thresholds. All three must be satisfied. Meeting two out of three is not enough.

The Income Limit

In 2026, a single applicant for New Jersey long-term care Medicaid must have gross monthly income of no more than $2,982. This includes Social Security benefits, pension payments, IRA distributions, rental income, and virtually all other income sources.

If a parent’s income exceeds this threshold, they are not automatically disqualified. New Jersey allows applicants to use a Qualified Income Trust, sometimes called a Miller Trust, to redirect excess income and meet the limit. The excess income goes into the trust each month, and the trust pays the nursing home. This is a planning tool that requires proper setup — it is not something a family should attempt to structure without legal guidance — but it exists specifically for situations where income is slightly above the cap.

For married couples where only one spouse is applying, the community spouse’s income is not counted toward the applicant’s eligibility. Only the applying spouse’s income is evaluated.

The Asset Limit — and What Actually Counts

This is where most families get tripped up, and it is where the distinction between countable and exempt assets does the most work.

In 2026, a single applicant for New Jersey nursing home Medicaid must have no more than $2,000 in countable assets. That number sounds alarming — and it should, because it is very low. But the key word is countable. Not every asset a person owns counts toward that limit.

Countable assets include cash, checking and savings accounts, money market accounts, stocks, bonds, certificates of deposit, investment accounts, cryptocurrency, retirement accounts including IRAs and 401(k)s, and real estate that is not the applicant’s primary residence.

Exempt assets — those that do not count toward the limit — include the applicant’s primary residence, provided the applicant intends to return home or a spouse or disabled child lives there, and provided the home’s equity does not exceed $1,130,000 in 2026. One motor vehicle of any value is also exempt. Personal belongings and household furnishings are exempt. Prepaid, irrevocable funeral arrangements are exempt.

The home exemption is one of the most misunderstood aspects of Medicaid planning. Many families believe that owning a home automatically disqualifies a parent from Medicaid. It does not — while the applicant or their spouse is living. However, New Jersey has an estate recovery program, which means the state may seek reimbursement from the estate after the Medicaid recipient dies, including from the home. This is a significant planning consideration that affects how property should be structured well before an application is filed.

How the Rules Change for Married Couples

When one spouse needs nursing home care and the other does not, the rules are designed to prevent the healthy spouse — called the community spouse — from being impoverished by the cost of care.

All of a married couple’s assets are considered jointly owned for Medicaid purposes, regardless of whose name they are in. The total is calculated as of a snapshot date — typically the date the ill spouse first enters a nursing facility for a continuous period of care. From that total, the community spouse is entitled to retain half of the couple’s countable assets, subject to a minimum of $32,532 and a maximum of $162,660 in 2026. This is called the Community Spouse Resource Allowance.

The applicant spouse must spend down their share to $2,000 before Medicaid eligibility begins. The community spouse keeps their protected amount plus the primary residence, one vehicle, and household goods.

One important New Jersey-specific detail: in New Jersey, the community spouse’s retirement accounts are counted as countable assets. This is stricter than some other states and catches families off guard, particularly when a significant IRA is in the community spouse’s name.

The Five-Year Lookback and Why Timing Matters

New Jersey enforces a five-year Medicaid lookback period. When a long-term care Medicaid application is filed, the state reviews all financial transactions for the five years preceding the application date. Any assets that were gifted or transferred for less than fair market value during that window are treated as a violation, and a penalty period of ineligibility is calculated based on the value of those transfers.

The lookback does not apply to all transfers. Transfers to a spouse are exempt. Transfers to a blind or permanently disabled child are exempt. Transfers to a sibling with an equity interest in the home are exempt under certain conditions. Transfers to a caregiver child who lived with and cared for the applicant for at least two years before the nursing home admission are also exempt.

But the most common mistake families make is transferring assets — to children, into a trust, or out of the estate — without understanding how the lookback works. A gift made four years before an application can trigger a penalty period that delays Medicaid coverage for months. The timing of planning matters as much as the planning itself.

This is why Medicaid planning is most effective when it begins well before a crisis. A family that starts planning five or more years before a parent needs care has the full range of options available. A family that starts planning after a nursing home admission has far fewer.

Not Meeting the Limits Does Not Mean Ineligible

This is the point most families do not hear clearly enough. A parent whose income or assets exceed the Medicaid limits is not automatically ineligible. They may not be immediately eligible. Those are different things.

There are legal planning tools designed specifically for this situation — Medicaid Asset Protection Trusts, Qualified Income Trusts, spousal annuities, spend-down strategies, and caregiver agreements, among others. Each has specific requirements, timing considerations, and potential consequences. Used correctly and in the right sequence, they can bring an otherwise ineligible applicant within the program’s limits without violating the lookback rules.

None of these strategies should be attempted without an elder law attorney who practices in New Jersey Medicaid planning. The rules are technical, the stakes are high, and a mistake can cost a family the coverage they are trying to protect.

Plan Well. Live Better.

Medicaid planning is not about gaming the system. It is about understanding the rules well enough to use them the way they were designed to be used — to protect families from financial devastation when long-term care costs arrive. At Milvidskiy Law Group, we help New Jersey families understand whether a loved one is eligible, what planning options are available, and how to build a strategy that actually holds up. Learn more about our Medicaid planning services.

This article is for informational purposes only and does not constitute legal advice. Estate planning and elder law are highly individual — what is right for one family may not be right for another. We encourage you to speak with a qualified attorney to discuss your specific situation. Medicaid eligibility rules and figures are subject to annual adjustment — always verify current limits with a qualified elder law attorney.