Medicaid Spend-Down in Burlington County, New Jersey (2026)

The Payment: $60,000 for Fifteen Years of Care

Eleanor is 86 and has lived in Willingboro since 1972. Her husband retired from a civilian position at what is now Joint Base McGuire-Dix-Lakehurst and died in 2014.

Her daughter Karen left a full-time job in 2010 to care for her. Fifteen years of driving to Virtua in Mount Holly, managing medications, cooking, bathing, sitting in emergency rooms, and losing her own earnings and retirement contributions in the process. Nothing was ever written down, because families do not write things down.

In June 2023, Eleanor wrote Karen a check for $60,000. She called it “for all those years.” Everyone in the family understood it as wages long overdue.

In September 2022, Eleanor had also given her grandson $45,000 toward a down payment on a townhouse in Evesham.

In January 2026 Eleanor’s dementia progresses past what Karen can manage safely, and she needs a long-term nursing facility bed. Her remaining property:

• $19,000 in a South Jersey credit union
• Her Willingboro house, which she hopes to return to
• A 2013 sedan
• A $125,000 whole life policy from 1988, with $27,000 of cash surrender value and a $268 monthly premium
• $100,000 of Veterans’ Group Life Insurance coverage of her own, carried since her separation from the Army Nurse Corps in the late 1960s
• A $1,000 burial policy

Karen files the MLTSS application in February 2026. The Board of Social Services asks for sixty months of statements. Both payments are inside the window, and both are on the credit union statement in plain view.

Total transfers: $105,000.

Why New Jersey Treats a Caregiver Payment as a Gift

The rule is not about intent. It is about whether the applicant received something of equivalent value at the time of the transfer, provable on paper.

Three doctrines combine against Karen’s check:

Services already rendered are presumed to have been provided for free. This is the one that surprises everyone. Absent a written agreement made before the care was given, Medicaid programs generally presume that care provided by a family member was gratuitous — a gift of love, not a debt. A payment made afterward is therefore not compensation for a debt; it is a transfer of assets with no consideration. Fifteen years of genuine work does not overcome the presumption.

The value has to be documented and reasonable. Even where an agreement exists, the compensation must be at a rate reasonable for the local market and the services actually performed, and there has to be a record of what was performed.

Lump sums are treated with particular skepticism. A single large payment for an unspecified period of past service is the archetype of a disguised gift, whether or not it is one.

New Jersey applies these rules in earnest. The state reviews the sixty months before the application and it does not need to prove bad motive — an unexplained or uncompensated outflow is enough. A disqualifying transfer produces a penalty period calculated as described two sections down.

One narrow avenue exists and it is worth raising with an attorney rather than with the caseworker: a transfer can sometimes be rebutted on evidence that it was made exclusively for a purpose other than qualifying for Medicaid. That argument is fact-heavy and hard, and it is far stronger where contemporaneous records exist — a log of hours, a pattern of periodic payments over years rather than one lump sum, correspondence discussing wages. If any of that exists in Karen’s case, it belongs in a lawyer’s hands immediately.

What a Valid Personal Care Agreement Would Have Looked Like

This section exists for families who still have time, because the fix costs almost nothing and prevents the entire problem.

A personal care agreement — also called a personal services contract or family caregiver agreement — generally needs to be:

• In writing and signed before the services begin. Prospective, not retroactive. This is the single most important element.
• Specific about the services. Transportation, medication management, meal preparation, bathing assistance, bill paying, overnight supervision — enumerated, not summarized.
• Specific about the rate and schedule. An hourly or monthly rate at or below what a licensed home care agency in Burlington County would charge for comparable work, with a stated number of hours. Paying above the local market rate invites the excess to be treated as a gift.
• Paid periodically, not in a lump sum, and paid by check or transfer so there is a record on both sides.
• Documented as it runs. A simple log of dates and hours.
• Reported as income by the caregiver. This is the part families balk at, and it is not optional. Compensation for services is taxable income to the caregiver, and there may be employment tax obligations. A payment nobody reported as income is much harder to characterize as wages later. Talk to a tax professional.
• Drafted by a New Jersey elder law attorney. The document has to satisfy Medicaid rules, not just look official.

Done properly, a personal care agreement converts money that would otherwise be a countable asset into legitimately spent funds while compensating a family member who has earned it. Done afterward, on a napkin, it converts nothing.

The Division: New Jersey’s Daily Divisor

New Jersey converts a transferred amount into a period of ineligibility by dividing it by a statewide average daily private-pay cost of nursing facility care that the Division of Medical Assistance and Health Services publishes and periodically updates. Get the current 2026 figure from the Board of Social Services or from an elder law attorney before running any numbers — an outdated divisor errs on the optimistic side, and that is the direction that hurts families.

That daily rate has been in the neighborhood of roughly $400 or more a day in recent years. For this worked example, assume $420 a day, which works out to about $12,775 a month.

Eleanor’s calculation:

$105,000 ÷ $420 per day = 250 days, roughly 8.2 months of ineligibility. Ask specifically how New Jersey treats a fractional remainder in your case.

Note what the divisor is: a single statewide average blending Bergen and Essex County rates with Cumberland and Salem County rates. Burlington County sits in the lower half of that spread, because South Jersey prices below the northern counties. Independent cost-of-care surveys and CMS Care Compare data place New Jersey semi-private skilled nursing roughly in the $11,500 to $13,500 a month range as of 2026, with Burlington County facilities generally around $11,000 to $12,800 and assisted living in Moorestown, Evesham and Medford commonly quoted between about $6,000 and $7,500 a month.

So take 8.2 penalty months at about $12,000 a month: roughly $98,000 of private pay against $105,000 transferred. Near parity in dollars — which is worse than it sounds, for the reason in the next section.

Step	Input	Result
Look-back window	Application February 2026, sixty months back	Roughly February 2021 forward; both payments are inside
Caregiver payment, no written agreement	June 2023 check to daughter	$60,000 treated as an uncompensated transfer
Family gift	September 2022 down-payment help	$45,000 transfer
Total transferred	Both items	$105,000
Divisor (assumed; verify with DMAHS)	Statewide average daily private-pay rate	$420 per day, about $12,775 per month
Penalty length	$105,000 ÷ $420	250 days, roughly 8.2 months
Countable assets to spend first	$19,000 cash + $27,000 policy cash value	About $44,000 above the $2,000 limit
Penalty start	When otherwise eligible and in the facility	Roughly June 2026, running into early 2027
Total private-pay exposure	Spend-down plus penalty at about $12,000 a month	Roughly twelve months, about $144,000
Carrying cost of an empty age-restricted unit	Association fees, taxes, utilities, insurance	Several hundred dollars a month that cannot fund care

When the Clock Starts, and the Empty-Unit Problem

The penalty begins on the later of the transfer date or the date Eleanor is otherwise eligible — in a facility, meeting the level-of-care standard, and at or below the asset limit. Not in 2022 or 2023. Not in February 2026.

She has $19,000 in the credit union plus $27,000 of countable policy cash value, roughly $46,000 against a $2,000 limit, so about $44,000 has to be legitimately spent first. At roughly $12,000 a month that is about 3.7 months. She becomes otherwise eligible around June 2026, and the 8.2-month penalty runs from there into roughly February 2027. Total private-pay exposure: about twelve months at $12,000 a month — roughly $144,000 — against $46,000 of reachable assets. The $105,000 that would have covered most of it is in a townhouse in Evesham and in Karen’s household budget from three years ago.

Now the Burlington County-specific drain that national guidance never mentions.

Burlington County is New Jersey’s largest county by land area and it holds an unusually large concentration of age-restricted housing — Leisuretowne in Southampton, Holiday City-style developments, and a long list of 55-plus communities built from the 1970s onward, alongside continuing care communities such as Medford Leas. Units in those developments carry monthly association or community fees, and those fees do not stop when the resident moves into a facility. Neither do property taxes, utilities to keep pipes from freezing, or insurance.

During a twelve-month private-pay period, a family may be carrying $400 to $700 a month in association fees plus taxes and utilities on an empty unit while also paying $12,000 a month for care. That is real money — potentially $10,000 or more over the penalty period — and it is money that cannot be spent on the applicant’s care because it is being spent on a house nobody lives in.

Two practical points. First, selling the unit during the penalty converts an excluded resource into countable cash, which is sometimes exactly right during a penalty period and sometimes disastrous — that decision belongs with an attorney, not a real estate agent. Second, if the applicant genuinely intends to return home, the carrying costs are part of maintaining that intent, and some of them may be relevant to the income deduction analysis. Ask the county caseworker specifically. Our Burlington County nursing home cost page covers the facility side of the arithmetic.

The Military Insurance File: SGLI, VGLI, and SBP

Joint Base McGuire-Dix-Lakehurst is the largest employer in Burlington County and the only tri-service installation of its kind, and it has left this county with a very large military and federal-retiree population. That changes what is in the insurance file, and generic Medicaid guidance gets it wrong.

SGLI. Servicemembers’ Group Life Insurance covers members on active duty and generally terminates shortly after separation, with a limited window to apply for Veterans’ Group Life Insurance without proof of good health. It is group term coverage and builds no cash value, so there is generally nothing for the asset test to count as a resource.

VGLI, and the conversion right most veterans never hear about. Veterans’ Group Life Insurance is renewable term coverage administered for the VA, with premiums that rise with age and no cash value. But VGLI carries a feature worth knowing: a VGLI policyholder generally has the right to convert the coverage to an individual commercial policy from a participating insurance company, at that company’s standard rates, without having to prove good health. Confirm the current rules, the participating-company list, and the procedure directly with the Department of Veterans Affairs before relying on any of this — but understand what it means. A veteran whose health has declined can obtain individual permanent coverage without underwriting, and an individual permanent policy, unlike VGLI, can accumulate cash value and can potentially have value in the secondary market. That is a materially different asset from the term coverage they hold today.

It cuts the other way too: converting to a permanent individual policy creates cash value that is a countable resource. Whether conversion helps or hurts depends entirely on whether the goal is coverage, liquidity, or eligibility. Do not convert without advice.

SBP. The Survivor Benefit Plan is the military retirement annuity election that provides a continuing payment to a surviving spouse. Whether a retiree elected it, and at what level, determines how badly a household’s income falls at the first death. In a county with this many military retirees, a declined or reduced SBP election is frequently the reason a family cannot afford to give up a life insurance death benefit — which is a legitimate and important reason not to sell a policy.

FEGLI, for the civilian federal workforce on and around the base, is group term with no cash value, though its face amount still counts toward the aggregation test below, and its retirement reduction elections should be confirmed with the Office of Personnel Management rather than assumed.

The Face-Value Rule, and Where the Policy Fits the Penalty

The rule runs on face value and aggregates. Add the death benefits of every policy the applicant owns on their own life. If the combined total is $1,500 or less, the cash surrender value of those policies is generally excluded as a burial resource. If it exceeds $1,500 by any amount, the entire cash surrender value becomes countable. Verify the current threshold with the Board of Social Services; our page on how life insurance is counted as a Medicaid asset covers the mechanics and the New Jersey asset and income limits page holds the state figures.

Eleanor’s combined face value is well over $200,000 counting the whole life policy, the VGLI coverage and the burial policy, so the exclusion is gone and the entire $27,000 of whole life cash value is countable. Note the interaction: her VGLI has no cash value of its own, but its $100,000 face amount contributes to the aggregation test that stripped the exclusion from her $1,000 burial policy. For a veteran whose only permanent coverage is a small burial policy, VGLI face value alone can be the thing that makes it countable.

During a penalty period the analysis inverts. Outside a penalty, turning a policy into cash simply moves a countable asset between columns and the proceeds are generally treated as income in the month received and a resource afterward. But NJ FamilyCare is paying nothing during those 8.2 months regardless, so every dollar the policy produces is a month of care the family does not have to fund from somewhere else. The $27,000 of surrender value covers roughly two of Eleanor’s twelve months. A secondary-market sale, if the policy qualifies, would generally yield more than surrender value.

The four exits: keep paying and stay ineligible; surrender for cash value, simplest and by design lowest-value; elect reduced paid-up coverage, which stops the premium but leaves cash value countable and therefore fixes affordability rather than the asset test — see reduced paid-up versus a settlement; or have the policy reviewed for the secondary market.

When selling is the wrong answer. When the total face amount sits inside the burial exclusion. When the face amount is above the exclusion but below the size institutional buyers evaluate. When the coverage is SGLI, VGLI or FEGLI term with no cash value — document that it is worth nothing and close the line item. When a surviving spouse needs the death benefit, which in this county specifically means when SBP was declined or reduced. When the insured is in good health for their age, since secondary-market pricing runs on life expectancy underwriting. And always before the rider schedule has been read, because an accelerated death benefit or chronic illness rider may pay part of the death benefit directly on better terms than any outside offer. And never transfer a policy’s ownership as a planning step — that is itself a transfer valued at fair market value, which can exceed cash surrender value substantially. See how the look-back applies to a policy sale.

Curing It, and Filing in Burlington County

A full cure. If the transferred money is returned to the applicant, the penalty can generally be eliminated. Karen returning what she can and the grandson refinancing to return part of the $45,000 each reduce the penalty; a full return removes it. The money then becomes Eleanor’s countable asset, spent on her own care — which is what would have happened anyway. Families resist this fiercely. Arithmetically it is not close.

A partial cure generally reduces the penalty proportionally; ask the attorney how New Jersey applies partial returns under current policy.

Undue hardship. New Jersey has a process for claiming that a penalty would deprive the applicant of medical care such that health or life is endangered, or of food, clothing or shelter. It requires documentation, generally including evidence the asset cannot be recovered, and it is not granted because an outcome is unfair. Facilities sometimes assist, since an unpaid resident is their problem too.

What does not work: transferring more to reach the limit faster, which adds penalty months; and waiting quietly, since the penalty does not run until the applicant is otherwise eligible and in a facility.

Where to go:

• The Burlington County Board of Social Services, in the county complex on Woodlane Road near Mount Holly, takes MLTSS and institutional Medicaid applications and determines financial eligibility. Ask for the long-term-care document checklist before you begin and expect sixty months of asset verification.
• The Burlington County Office on Aging and its Aging and Disability Resource Connection provide free options counseling, caregiver support, and help understanding MLTSS. This is the right first call, and it also delivers New Jersey’s State Health Insurance Assistance Program counseling — free, unbiased, selling nothing.
• The New Jersey Department of Banking and Insurance regulates life insurance and life settlement activity in New Jersey and can confirm whether a company contacting you about a policy holds a New Jersey license.
• The Department of Veterans Affairs, for anything touching SGLI, VGLI or SBP. Get the current status and conversion rules in writing.
• A New Jersey elder law attorney. With a caregiver payment and a family gift inside the look-back, this is not optional.

One structural point about New Jersey that matters more than any single number: because MLTSS applies the same financial eligibility rules to home-based care as to a nursing facility bed, there is no cheaper eligibility door here. In states where a home and community based waiver carries a higher asset limit, a family can sometimes stay at home under easier rules. New Jersey does not offer that. Combine that with care costs among the highest in the country and a $2,000 asset limit, and New Jersey spend-downs are short, steep, and unforgiving — which is exactly why the personal care agreement in section three, signed before the care begins, is the highest-value thing a Burlington County family can do.

If there is an in-force policy in the file, a free policy review will establish what it is genuinely worth before anyone signs a surrender form, including when the honest answer is that it has no market value. Pine Lake Life Solutions provides education and reviews only.

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Frequently Asked Questions

My sister cared for Mom for fifteen years. Why is paying her a gift?

Because Medicaid programs generally presume that care provided by a family member without a written agreement made beforehand was given freely. A payment afterward is therefore not settlement of a debt but a transfer with no consideration. The years of work are real; the presumption is about documentation, not fairness. Raise any contemporaneous records with an elder law attorney immediately.

What makes a personal care agreement valid?

It must be in writing and signed before the care begins, enumerate the specific services, state an hourly or monthly rate at or below the local market rate for comparable agency care, be paid periodically rather than in a lump sum, be documented with a log of hours, and be reported as taxable income by the caregiver. Have a New Jersey elder law attorney draft it.

Where does a Burlington County family file?

With the Burlington County Board of Social Services in the county complex on Woodlane Road near Mount Holly, which takes MLTSS and institutional Medicaid applications and determines financial eligibility. Ask for the long-term-care document checklist first, and expect sixty months of asset verification going back from the application date.

Does home care through MLTSS have an easier asset test?

No, and this is where New Jersey differs from several other states. MLTSS applies the same financial eligibility rules to home-based care as to a nursing facility bed, so there is no lower-threshold door for staying at home. Combined with some of the highest care costs in the country, that makes New Jersey spend-downs unusually short and steep.

Can VGLI be converted into something with cash value?

A VGLI policyholder generally has the right to convert the coverage to an individual commercial policy from a participating insurer at standard rates without proving good health. An individual permanent policy can accumulate cash value, unlike VGLI. That cash value is also a countable resource, so whether conversion helps depends on your goal. Confirm the current rules directly with the VA.

Why does my mother’s $1,000 burial policy count?

Because the exclusion depends on the combined face value of every policy she owns on her own life, and her VGLI coverage contributes face value to that test even though VGLI itself has no cash value. Once the combined total exceeds roughly $1,500, the entire cash surrender value of her permanent coverage becomes countable. Add all the face amounts before assuming anything.

What does a nursing home cost in Burlington County?

Independent cost-of-care surveys and CMS data place New Jersey semi-private skilled nursing roughly in the $11,500 to $13,500 monthly range as of 2026, with Burlington County generally around $11,000 to $12,800 because South Jersey prices below the northern counties. Assisted living in Moorestown, Evesham and Medford is commonly quoted at $6,000 to $7,500. Get written quotes.

Related Reading

• Nursing Home Costs Burlington County Nj
• Sell Life Insurance Policy Burlington County Nj
• New Jersey Medicaid Asset Income Limits
• Life Settlement Licensing New Jersey
• Life Insurance Counts Medicaid Asset
• Nursing Home Medicaid Spend Down
• Medicaid Lookback Selling Policy
• Reduced Paid Up Vs Settlement
• Sell Life Insurance Policy Camden County Nj

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Pine Lake Life Solutions does not purchase life insurance policies and does not provide legal, tax, or investment advice. Information provided is for educational purposes only. Eligibility for any option, including life settlements, is not guaranteed and depends on individual circumstances, policy terms, underwriting, and market conditions. Consult independent legal, tax, or financial professionals before making decisions regarding a life insurance policy.