Gifts By Medicaid Applicant Are Not Countable When They Are "Made Exclusively For A Purpose Other Than Establishing Medicaid Eligibility"

In a recent administrative law case, Estate of M.M. v. Division of Medical Assistance and Health Services, OAL Docket No. HMA 13911-08N (Union County, May 27, 2009), M.M. was married to Mr. M. and had two daughters. In 2006, M.M. and Mr. M. sold their home in Elizabeth, New Jersey.  With the proceeds from the sale, they purchased a $100,000 annuity earning a five percent (5%) return; gave $25,000 to each of their two daughters; paid other expenses/debts; and, deposited the remaining proceeds in the bank. Mr. M. and M.M. then flew to Uruguay for a six-month vacation, intending to return to New Jersey.

While in Uruguay, Mr. M. had a sudden heart attack.  Mr. M. was hospitalized and underwent heart surgery in Uruguay. As a result, M.M. and Mr. M. could not return to New Jersey as soon as they had originally planned.  Shortly after Mr. M. received clearance from his doctor to leave Uruguay, Mr. M. and M.M. flew to New Jersey. Soon thereafter, M.M. sought medical treatment due to leg pain and fatigue.  The examining doctor ordered blood work and, immediately upon receiving the test results, the doctor instructed the family to bring M.M. to the emergency room.  The family brought M.M. to Overlook Hospital, and she was admitted.  M.M.’s illness became progressively worse, and it ultimately resulted in her death in the hospital.

Soon after M.M.’s death, M.M.’s estate applied for retroactive institutional Medicaid benefits as of July 1, 2008. On the application for Medicaid, the estate disclosed the $50,000 gift made to M.M.’s daughters. At the time of the gift, M.M. was in good health and neither she nor her husband had any imminent need for nursing home care or for health care funded by Medicaid.

The Medicaid agency denied the application filed by M.M.’s estate. The agency determined that the distribution of $50,000 to the daughters resulted in a gift penalty of seven months and seventeen days commencing July 1, 2008.  The agency also concluded that, because M.M. was visiting her family in the United States when she became ill and did not maintain a permanent residence in New Jersey, she did not meet Medicaid’s residency requirement.  Finally, the agency found that the applicant had excess resources, making her ineligible.

The case was tried before an administrative law judge (ALJ), who reversed the agency’s decision and found the applicant/estate eligible for Medicaid. First, with regard to the $50,000 gift, the ALJ found that petitioner presented convincing evidence that the gifts to the daughters were made exclusively for a purpose other than establishing Medicaid eligibility, thereby meeting the statutory requirements set forth in N.J.A.C. 10:71-4.7(j); and N.J.A.C. 10:71-4.10(k). Second, with regard to the residency requirement in the Medicaid law, the ALJ found that the estate proved that M.M. and her spouse never intended to leave the United States permanently, they always intended to reside in New Jersey, and they did not come to New Jersey for the purpose of a temporary visit or to obtain medical treatment. Third, with regard to excess resources, the ALJ concluded that Mr. M.’s resource allowance must be increased because the couple’s monthly income was insufficient to provide Mr. M. with the minimum monthly income allowance guaranteed under Medicaid. By allowing Mr. M. to keep $69,642.13 more than would otherwise be permitted, at a five percent (5%) annual rate of return (i.e., the rate produced by the annuity), he will have an additional interest income, which will still not bring him up to the authorized monthly income allowance.   Thus, the couple’s remaining resources should be set-aside for Mr. M., in order to generate sufficient income to meet the deficit in his monthly income allowance and, thus, petitioner did not have any “excess resources” as of July 1, 2008.

Recently, the Director of the Division of Medical Assistance and Health Services, the State Medicaid agency, issued a decision affirming the ALJ’s findings of fact and conclusions of law.

Congratulations to my colleague, Linda Ershow-Levenberg, Esq., who represented the petitioner Estate of M.M. in the above case.