Medicaid Eligibility Established Although Gifts Were Made During The Look-Back Period

In the May 27, 2009 Initial Decision of Estate of M.M. v. DMAHS, a New Jersey administrative law judge (“ALJ”) made noteworthy decisions regarding two Medicaid topics: (1) increasing the Community Spouse Resource Allowance (“CSRA”); and (2) rebutting the presumption that a transfer of assets was made to establish Medicaid eligibility.

In the Estate of M.M. case, M.M. (the now-deceased Medicaid applicant) and her community spouse had gifted $50,000 to their daughters in May 2006 (during the Medicaid “look-back period”). In July 2008, M.M. unexpectedly became ill and ultimately died in September 2008. At the time she became ill, M.M. had no income of her own. Her husband’s income was $440.36 below the $1,750 minimum monthly maintenance needs allowance (“MMMNA”). Their assets totaled $139,284.25, comprised of a checking account, a money market account and an annuity that earned 5% interest annually. M.M.’s Medicaid application was denied based on excess resources, transfer of resources, and failure to meet the Medicaid residency requirements.

After first rejecting Medicaid’s residency challenge, the ALJ addressed Medicaid’s claim that M.M.’s excess resources rendered her ineligible for Medicaid. The ALJ noted that, in general, one-half of a couple’s combined countable resources (the CSRA) is protected for the community spouse and is not included in determining an applicant’s financial eligibility for Medicaid. However, the ALJ also noted that M.M.’s husband’s income was $440.36 below the MMMNA, and that M.M. herself had no available income for the spousal deduction. The M.M. judge cited N.J.A.C. 10:71-5.7(d), which permits additional resources to be set aside for a community spouse when the institutionalized spouse’s income and the income generated from the community spouse’s share of the couple’s resources is insufficient to provide the maximum MMMNA for the community spouse. On that basis, the ALJ found that the CSRA should be increased so that those additional resources could generate additional income for the community spouse. (The ALJ noted that allowing the community spouse to retain the other half of the couple’s combined resources would provide him with an annual rate of return that would still render his income below the maximum authorized MMMNA). The ALJ set aside the couple’s total resources for the community spouse to generate additional income for the community spouse and, as a result of the set-aside, found that the institutionalized spouse did not have “excess resources.”

With regard to the transfer of assets made by M.M. and her community spouse during the “look-back” period, although the ALJ recognized that such a transfer raises a rebuttable presumption that the transfer was made to establish Medicaid eligibility, the ALJ concluded that the applicant in this case had rebutted that presumption. The ALJ cited N.J.A.C. 10:71-4.7(j), which lists “traumatic onset of disability” as one factor that might indicate that assets were transferred exclusively for some purpose other than to establish Medicaid eligibility. Because M.M. was fifty-six years of age and in good health at the time of the gifts (which had been made to the daughter that the couple resided with and to their other daughter as a wedding gift), the ALJ accepted the petitioner’s claim that the gifts were made for purposes other than to qualify for Medicaid.

The Estate of M.M. case can be found here – mm-vs-dmahs1