The state of New Jersey has settled a class action lawsuit and agreed not to count veterans pension benefits as income when determining Medicaid eligibility.  Plaintiffs’ counsel has been paid $100,000 in fees.

Alma Galletta filed a class action lawsuit against New Jersey, seeking to enjoin the state from treating Veterans Administration Improved Pension (VAIP) as income for Medicaid eligibility purposes. Ms. Galletta argued that the entire income she received from her VAIP benefit resulted from unusual medical expenses, so it should not count toward her income for Medicaid eligibility purposes.

After a U.S. district court enjoined the state from counting one of the class member’s VAIP as income, the state began settlement negotiations with Ms. Galletta. On February 6, 2015, the court approved a consent order between the parties, in which the state agreed that VAIP will not be included as countable income during the Medicaid eligibility process and a notice will be distributed to caseworkers explaining the ruling. Ms. Galletta also received Medicaid benefits retroactive to her application. In addition, the court approved $100,000 in fees and costs for the plaintiffs’ attorneys.