In a very unusual ruling, a New York appeals court ruled that, despite transferring significant assets to family members, an applicant still qualified for Medicaid because the transfers were made exclusively for a purpose other than to qualify for benefits. Matter of Safran v. Shah, Docket No. D42144 (App. Div., 2nd Dept., July 2, 2014)

In this case, the Medicaid applicant made two transfers of assets several years prior to filing for Medicaid. At the time the gifts were made, she was living independently and did not require nursing home care. The applicant made the gifts to family members to show her appreciation for help provided. Even though the gifts were significant, the applicant retained sufficient assets to pay for all needed care for at least five (5) years, the Medicaid look-back period. Unfortunately, many of the retained assets were stolen, leaving the applicant in need and without sufficient assets to pay her care costs. As a result, she applied for Medicaid. Eligibility was denied by the case worker based upon the gifts to family members.

The applicant filed an administrative appeal for a Fair Hearing. On appeal, the applicant argued that she transferred assets to family members for reasons other than to qualify for Medicaid. In that regard, under the Medicaid rules in most states, the law presumes that a transfer of assets for less than fair market value by an applicant was made to qualify for Medicaid. However, the applicant can rebut the presumption. The presence of one or more of the following factors, while not conclusive, may indicate that assets were transferred exclusively for some purpose other than establishing Medicaid eligibility:

1. The occurrence after transfer of the resource of: (i) Traumatic onset of disability; (ii) Unexpected loss of other resources which would have precluded Medicaid eligibility; (iii) Unexpected loss of income which would have precluded Medicaid eligibility.
2. Resources that would have been below the resource limit during each of the preceding [60] months if the transferred resource has been retained.
3. Court-ordered transfer.
4. Evidence of good faith effort to transfer the resource at fair market value.

Although the applicant appeared to meet the “unexpected loss of other resources which would have precluded Medicaid eligibility” exception to the asset transfer rule, the administrative law judge affirmed the denial, and the agency director agreed with the decision denying benefits. The applicant again appealed.

Surprisingly, the appeals court reversed. The appeals court ruled that the applicant had successfully rebutted the legal presumption that any transfer of assets was made to qualify for Medicaid:

The transfers were made out of appreciation for her family, and still left her with enough resources to maintain herself for years. If it were not for the unexpected loss of resources through theft, [the applicant] would not have needed to apply for Medicaid. Therefore, the petitioner met her burden of rebutting the presumption that the two subject transfers were made by the anticipation of a future need to qualify for [Medicaid].

The appeals court found that the transfers were not countable and ruled that the applicant was eligible for Medicaid.

The case is annexed here – Matter of Safran v. Shah

For additional information concerning Medicaid and public benefits planning, visit:
https://vanarellilaw.com/medicaid-public-benefits-planning/