This matter arose from the imposition of a transfer penalty on Petitioner’s receipt of Medicaid benefits.

Beginning in 2018, Petitioner resided with her son, R. R., and R. R. ‘s wife. Petitioner previously resided in her own home. On November 1, 2018, Petitioner and R. R. executed a “Room Rental Agreement, ” wherein Petitioner agreed to pay R. R. $600 per month to live in his home for a period of one year. On November 7, 2018, Petitioner, R.R., and Petitioner’s daughter, L. R., executed a notarized “Personal Care Contract.” wherein R. R. and L. R. agreed to provide daily personal and financial management tasks for Petitioner, who was said to “require . . . significant assistance with her activities of daily living and with the management of her property and finances,” without which Petitioner would “be at risk and may suffer harm. ” The agreement lasted for the reminder of Petitioner’s life.

On May 1, 2019, Petitioner executed an un-notarized, one-page “Loan Agreement,” wherein Petitioner agreed to “pay back all monies spent on the renovations of my home. This payment will be reimbursed to my son, [R. R. ], upon sale of my home, whether this occurs when I am alive or deceased. ” At the bottom of the agreement, language was taken from a website that addressed how to avoid Medicaid asset transfer penalties during the five-year look back period, including making home modifications.

On March 12, 2020, R. R. sold Petitioner’s home to his daughter, L. M., and her husband for $150,000. The proceeds of the sale were deposited into Petitioner’s checking account and then on April 3, 2020, R. R. issued a check to himself in the amount of $107,200. The memo line of the check stated “Remodel House pay back.” R.R. alleges that the $107, 200 payment to himself was reimbursement for the home equity loans he took out on his own home in order to pay for renovations to Petitioners home.

P.L., filed an application for Medicaid benefits on April 28, 2021.  On June 1, 2021, the Atlantic County Department of Family and Community Development found P.L. to be eligible for Medicaid benefits but imposed a 579-day penalty resulting from asset transfers totaling $209, 359. 05 during the look-back period, which included the $107,200 reimbursement check paid to R.R.

Petitioner appealed, contesting only the penalty period resulting from the transfer of $107, 200 from Petitioner to her son, R. R. Petitioner claimed that the asset transfer was exempt from the penalty provisions of the law because the assets were transferred solely for some other purpose other than to qualify for Medicaid benefits.

Under the Medicaid regulations, “[i]f an individual . . . (including any person acting with power of attorney or as a guardian for such individual) has sold, given away, or otherwise transferred any assets (including any interest in an asset or future rights to an asset) within the [5-year] look-back period, ” a transfer penalty of ineligibility is assessed. However, an applicant “may rebut the presumption that assets were transferred to establish Medicaid eligibility by presenting convincing evidence that the assets were transferred exclusively (that is, solely) for some other purpose.

The matter was tried before an administrative law judge (ALJ). The ALS rendered an Initial Decision upholding the imposition of a transfer penalty imposed, finding that Petitioner failed to rebut the presumption that this transfer was done for the purposes of qualifying for Medicaid.

The decision was then reviewed by the Director of the State Medicaid Agency. The Director affirmed the ALJ’s decision, for two reasons. First, the Director found that the  language contained in the “Personal Care Contract” and the “Loan Agreement discuss the Medicaid’s look-back period and Medicaid asset transfer penalties. The Loan Agreement” specifically has language regarding how to avoid Medicaid asset transfer penalties and suggests that home modifications can be used to avoid such a penalty. The inclusion of such language in the contracts was found to show that the establishment of Medicaid eligibility for Petitioner was a factor in the transfer.

Second, the Director ruled that Petitioner did not show “a nexus between the alleged loans, any actual remodeling expenses for Petitioner’s home, and the $107, 200 transfer. It is unclear when the alleged loans were entered into it, the total amount of the alleged loans, or that the alleged loans were used for Petitioner’s benefit.”

The Director entered a Final Agency Decision upholding the imposition of a penalty period resulting from the transfer of $107, 200 from Petitioner to her son, R. R.

The case, P.R. v. Div. of Med. Assis. And Health Servs. and Atlantic Cty. Bd. Of Social Servs., OAL HMA 05682-2021, Initial Decision, aff’d, Dir. (April 18, 2022),  is annexed hereto –

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