20 Nov Is ANCHOR counted for Medicaid purposes?

Q. Do property tax rebates count as income? Or do they need to be spent down within the year of the date of the check for Medicaid purposes? I know the ANCHOR benefit does not nor does it count as income on your tax return, which was answered last year. Is the Senior Freeze considered the same since it’s not earned income? It’s very difficult to know which monies need to be spent down to keep qualifications in checking account balance or which do not count, and how and on what you can spend down those dollars if necessary to keep Medicaid.
— Figuring it out

A. Lots of people have asked this question.

There are several pieces to consider.

Property tax relief benefits, whether they are property tax rebates, ANCHOR benefits or Senior Freeze benefits, are not income for purposes of reporting income on your New Jersey income tax return, said Catherine Romania, an estate planning attorney with Witman Stadtmauer in Florham Park.

“For federal income tax purposes, rebates and refunds will be included in income in the year received if you deducted the taxes in the prior year as an itemized deduction,” she said. “However, if you used the standard deduction on your prior year return, then the rebate or refund would not be includible in income.”

For purposes of Medicaid, any funds received as a result of a rebate or refund will not generally result in a disqualification if spent down before the end of a 12-month period, Romania said.

“If held longer than that, and such accumulation results in assets in excess of the asset resource limitation, it will likely result in a disqualification from Medicaid for a period of time,” she said.

Romania offered this example. If a Medicaid recipient is permitted to only retain $2,000 of resources to qualify for government benefits and receives a tax refund that puts the recipient over $2,000 for multiple months — but not more than 12 months — there will be no loss of benefits or disqualification.

“In that way, the recipient need not worry about immediately spending the refund for fear of loss of benefits,” she said.

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This story was originally published in November 2025.

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