A New Jersey appeals court ruled that a nursing home resident who transferred the majority of her assets to her son during the look-back period was ineligible for nursing home Medicaid benefits when she failed to prove the transfer was done exclusively for a purpose other than to qualify for Medicaid. A.M. v. Division of Medical Assistance and Health Services (N.J. Super. Ct., App. Div., No. A-4789-09T1, March 18, 2011) (unpublished).

A.M., a 92 year old woman, transferred $22,103.97, which was more than half her total assets, to her son in September 2006. In August 2009, A.M., who was then a nursing home resident, applied for Medicaid benefits. The county Medicaid agency found her eligible for benefits but imposed a penalty of three months and seven days as a result of the transfer to her son in 2006. She was given an opportunity to rebut the presumption that the transfer was made to qualify for Medicaid, but the evidence presented did not satisfy the Medicaid agency.

A.M. appealed, claiming that she transferred the money exclusively for reasons other than to qualify for Medicaid. Under N.J.A.C. 10:71-10(j), an applicant can rebut the presumption that a transfer of less than fair market value was made to qualify for Medicaid by proving the existence of one or more of the following factors:

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 30 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.

In order to rebut the presumption, A.M. explained that she gave money equally to all of her children over the years, but she had set aside money for her son because he was addicted to cocaine and going through a divorce, and she transferred the money to him only after he had been rehabilitated. At the time the transfer to her son was made, A.M. lived independently, was fully alert and oriented with no cognitive or memory impairment, and had no reason to suspect that she would need care in a nursing home or Medicaid eligibility in the future. A hearing officer reversed the county’s decision, determining that A.M. made the transfer well before the traumatic onset of her disability, and that the purpose of the transfer was to equalize the gifts to her children, not to qualify for Medicaid. However, the director of the Division of Medical Assistance and Health Services then reversed the hearing officer, holding that A.M. had not produced evidence to show why she suddenly transferred more than half her assets to her son when she was eighty-eight years old, leaving her with only about $20,000 to live on. A.M. appealed to the New Jersey Superior Court, Appellate Division (she died while the appeal was pending).

The New Jersey Superior Court, Appellate Division, affirmed, holding that A.M. did not establish that the transfer was done exclusively for reasons other than to qualify for Medicaid. The court noted that A.M. “failed to present any evidence as to how [A.M.] was allegedly able to live independently during the period between her substantial gift to her son and her admission to the nursing home.”

For the decisions of the administrative law judge and director of the Division of Medical Assistance and Health Services, click here. For the Appellate Division decision, click here.