The New Jersey Hospital Care Payment Assistance Program, commonly called “Charity Care,” is a state program for New Jersey residents with low income and resources who have no health insurance and are not eligible for programs like Medicaid and NJ FamilyCare.
There are many people in New Jersey who have no insurance or health benefits and who cannot afford to pay for the medical care they receive when they are an in-patient or out-patient in a hospital. New Jersey hospitals that provide general care are forbidden by law from turning away patients lack health insurance or lack the financial wherewithal to pay for their care. Those needing hospital care who lack medical insurance or sufficient assets to pay the hospital bill may be eligible for Charity Care.
If funds are placed in a special needs trust, those funds ordinarily would not jeopardize the beneficiary’s eligibility for Medicaid and other public benefits based on need. In the typical case, special needs trusts allow a disabled beneficiary to receive gifts, lawsuit settlements or other funds and yet not lose eligibility for government programs. Such trusts are drafted so that the funds will not be considered as belonging to the beneficiary in determining his/her eligibility for public benefits. As their name implies, special needs trusts are designed to pay for comforts and luxuries which are not paid for by public assistance funds; these trusts do not provide basic support. Special needs trusts typically pay for things like education, recreation, counseling, and medical attention beyond the simple necessities of life. However, the trustee may use trust funds for food, shelter and other basic support items if the trustee decides doing so is in the beneficiary’s best interest despite a possible loss or reduction in public assistance. Would funds in a special needs trust be considered an asset for purposes of Charity Care eligibility?
According to N.J.A.C. 10:52-11.10, a Charity Care applicant must provide proof that his/her assets do not exceed $7,500. “Assets” are defined as “items which are, or which can be readily converted into, cash,” including “trust funds.”
Although this general definition includes trust funds, funds in a special needs trust are considered by Medicaid to be unavailable to the beneficiary; consequently, assuming that Charity Care follows Medicaid’s approach, the funds in a special needs trust would not be considered an “asset” by Charity Care. Unfortunately, legal research has revealed no cases in New Jersey, neither court cases nor those decided in the administrative fora, addressing this issue. Further, I received an unfavorable answer when I asked a program administrator for the N.J. Department of Health, Charity Care Unit, about the treatment of special needs trusts under the Charity Care program. According to the administrator, the controlling statute and administrative code do not distinguish between assets in special needs trusts and assets in other types of trusts and, since assets in trusts are countable in determining eligibility for Charity Care under the definition of “assets” set forth above, assets in special needs trusts are also countable. The failure to treat special needs trusts differently than other trusts is surprising and, I believe, an incorrect interpretation of the law since all other public benefit programs in New Jersey exempt assets in special needs trusts in determining eligibility for needs-based public benefits. Although the failure of the program to properly differentiate between special needs trusts and other trusts may be because no challenge the agency’s interpretation of the law has been advanced to date, the fact remains that assets in a special needs trust are counted by Charity Care at this time.