Medicaid Penalty Imposed On Applicant Who Began Paying Her Daughter After Two Years of Free Caregiving

A New Jersey appeals court ruled that a Medicaid applicant who began paying her daughter after the daughter provided two years of free caregiving did not rebut the presumption that a transfer of assets to a relative who previously provided services for free is an uncompensated transfer of assets for Medicaid purposes. E.B. v. Division of Medical Assistance and Health Services (N.J. Super. Ct., App. Div., No. A-3087-15T4, July 13, 2018).

In 2003, E.B., the then 80-year old mother of J.W., moved into a separate apartment in J.W.’s home. At that time, E.B. was unable to shop or cook for herself and needed assistance.

In 2009, petitioner was diagnosed with Lewy Body Dementia. Soon after her diagnosis, petitioner became delusional, requiring full-time care. As a result, J.W. resigned from her job in order to care for her mother full time.

In 2011, J.W. found that she could not meet her financial obligations due to the lack of income. She determined she either had to return to work and let a third party care for her mother during the day, or pay herself from E.B.’s savings to compensate her for providing care services. She chose the latter solution. At that time, J.W. held power of attorney for E.B.

After researching the usual hourly rate paid to caregivers in the area, J.W. began paying herself $10 per hour from E.B.’s funds to provide services to her mother. Specifically, J.W. paid herself $400 per week to provide 40 hours of care, plus $25 per week for the two-and- a-half hours she spent each week to shop for E.B.’s food, medication, and toiletries. J.W. paid herself $425 per week from April 2011 to May 2013. J.W. did not keep a ledger of the services she provided and the days and hours she performed them. J.W. claimed that, when lucid, her mother understood and agreed to pay J.W. for her services.

In May 2013, E.B. entered a nursing home. Through her daughter, E.B. applied for Medicaid benefits to cover the cost of nursing home care. The application was approved, but the Medicaid agency determined that the payment of $69,211.90 to J.W. for services she provided from 2011 through 2013 was an uncompensated transfer of assets and assessed a transfer penalty.

E.B. appealed, arguing that she rebutted the presumption she transferred assets for less than market value. After a hearing, the administrative law judge affirmed the initial decision of the Medicaid agency, ruling that there was not sufficient proof of the services allegedly provided by J.W. for E.B. to justify the payment. E.B. appealed to court.

The New Jersey Superior Court, Appellate Division, affirmed, holding that E.B. did not rebut the presumption that a transfer of assets to a friend or relative to compensate for care or services provided free in the past has been transferred for no compensation. According to the court, the lack of information about the specific services J.W. provided as well as the fact that E.B. was in a deteriorating health condition that might require nursing home care when she began paying J.W. indicated the transfer was made for less than fair market value.

The case is attached here – E.B. v. Division of Medical Assistance and Health Services

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