A New Jersey appeals court ruled that a Medicaid applicant’s daughter, who lived with her mother and provided care for 24 years before her mother was admitted to the nursing home, did not meet “caregiver child” exception to Medicaid’s transfer of assets rules because during that period care was provided by the applicant’s son for 5 months. M.K. v. Division of Medical Assistance and Health Services, Docket No. A-0790-14T3 (App. Div., May 13, 2016)

J.K. began living with her mother, M.K., in her mother’s home, in 1987. Although she lived an independent life at first, M.K.’s health declined, as she endured numerous surgeries, suffered a stroke, became blind in one eye, and became afflicted by Parkinson’s disease and dementia over the years.

These conditions required J.K.’s level of assistance to increase, and J.K. began helping M.K. in her daily care, such as dressing, bathing, ascending steps, and making meals. In addition to shopping for M.K.’s food, medications, clothing and other errands, J.K. performed all house cleaning, transportation and attended to M.K.’s financial affairs. J.K. also provided daily help because M.K., for the most part, did not leave the home. J.K. also transported M.K. to quarterly doctor and specialty physician visits.

In September 2010, M.K. moved to a nursing facility. M.K. was unhappy with this placement so, in October 2010, she left the facility to reside with her son. For 5 months, M.K.’s son and his wife assumed responsibility for M.K.’s care. However, J.K. continued to obtain M.K.’s medications and occasionally transported her to doctor’s appointments.

In January 2011, M.K. executed a deed transferring her residence to J.K. as a “caregiver child” under the Medicaid rules. In March 2011, M.K. returned to the nursing home. She resided there until her death in August 2012.

M.K. applied to the Burlington County Board of Social Services (the Board) for Nursing Home Medicaid benefits in January 2012. Because M.K. transferred ownership of her home to her daughter, J.K., for less than fair-market value within 60 months of entering the nursing home (called the Medicaid “look-back period”), the Board imposed a 24-month period of ineligibility for Medicaid benefits M.K. argued that the transfer of the home to J.K. satisfied the “caregiver child” exception to the Medicaid transfer of assets rule, and she appealed.

The appeal was heard by an administrative law judge (ALJ). The ALJ found J.K. provided M.K. with “care exceeding normal person support activities . . . necessary to [M.K.]’s health and safety,” which allowed her to remain in her home. The ALJ also found that M.K. needed an institutional level of care as of March 2011. However, the ALJ concluded that J.K. did not meet the “caregiver child” exception to Medicaid’s transfer of assets rules because J.K. was not M.K.’s caregiver for a full 2 years prior to March 2011 because of the intervening 5-month period when care was provided by M.K.’s son and his wife. Consequently, the ALJ concluded M.K.’s transfer of her home to J.K. did not meet the requirements of the “caregiver child” exemption,” triggering imposition of a penalty period and the denial of benefits. The Division of Medical Assistance and Health Services, the state Medicaid agency, adopted the ALJ’s findings and conclusions, and M.K. again appealed.

The appeal was heard by the Superior Court of New Jersey, Appellate Division. The Court first reviewed the rule governing the “caregiver child” exemption to Medicaid’s transfer of assets rules, which provides as follows:

[A]n individual shall not be ineligible for [Medicaid] because of the transfer of his or her equity interest in . . . the individual’s principal place of residence and the title to the home was transferred to:

. . . .

4. A son or daughter of the institutionalized individual . . . who was residing in the individual’s home for a period of at least two years immediately before the date the individual becomes an institutionalized individual and who has provided care to such individual which permitted the individual to reside at home rather than in an institution or facility.

i. The care provided by the individual’s son or daughter for the purposes of this subchapter shall have exceeded normal personal support activities (for example, routine transportation and shopping). The individual’s physical or mental condition shall have been such as to require special attention and care. The care provided by the son or daughter shall have been essential to the health and safety of the individual and shall have consisted of activities such as, but not limited to, supervision of medication, monitoring of nutritional status, and insuring the safety of the individual. [N.J.A.C. 10:71-4.10(d)(4)]

The Court confirmed the state Medicaid agency’s decision to deny benefits. The Court found that, although J.K. provided the requisite level of care that “exceeded normal personal support activities,” J.K. did not supply that care for the 2-year period “immediately before the date the individual becomes an institutionalized individual” mandated by the rule because for a period of approximately 5 months J.K. provided no care for M.K., who resided with her son.

The case is annexed here – M.K. v. Division of Medical Assistance and Health Services