In E.S. vs. Division of Medical Assistance and Health Services, petitioner, a 91 year old nursing home resident, transferred $42,053 to her son after paying the nursing home privately from her savings for two years. The nursing home payments and the gift combined to leave petitioner with no assets, so she applied for Medicaid. The Division of Medical Assistance and Health Services (DMAHS), the State Medicaid agency, imposed a 6 month and 9 day penalty period as a result of the gift. During the penalty period, the petitioner’s son paid the nursing home’s bill each month using the gifted assets to pay for care. A total of $30,488 was paid to the nursing home by the son from the gifted assets. Both the petitioner and DMAHS agreed that the payments made by petitioner’s son to the nursing home for petitioner’s care were considered to be a “returned gift” under the Medicaid rules, resulting in a proportional reduction in the penalty period. The remaining funds, $11,605, were treated as the remaining gift, resulting in a reduced penalty period of 1 month and 9 days of ineligibility for Medicaid. When DMAHS and petitioner disagreed about the start date of the reduced penalty period, petitioner appealed.
The appeal was assigned to Administrative Law Judge Stephanie M. Wauters. After a hearing, ALJ Wauters held that both petitioner and DMAHS misinterpreted the law regarding “returned gifts” under Medicaid. According to ALJ Wauters, no reduction in the penalty period can occur if assets are returned after an application for Medicaid benefits has been filed. Since all payments were made to the nursing home after a Medicaid application had been filed, Judge Wauters held that the payments made to the nursing home had no effect on the penalty period, and the original 6 month and 9 day penalty period should not have been reduced. The judge also held that the returned gifts were available to the petitioner because the nursing home was paid by the son in advance, one month before each payment was due, and, therefore, the petitioner was ineligible for Medicaid due to excess resources.
The petitioner filed exceptions to the ALJ’s decision. The case in now pending before the Director of DMAHS.
The new case disallowing reductions in a Medicaid penalty period based upon the return of gifted assets after a Medicaid application is filed is annexed here – es-v-dmahs
The exceptions filed by the petitioner can be found here – es-v-dmahs-exceptions
UPDATE: The Director of DMAHS affirmed the ALJ’s decision. The Director’s decision can be found here – es-v-dmahs-directors-final-decision The applicant did not appeal from the Director’s decision. As a result, ES vs. DMAHS is the governing law in New Jersey at this time.
AGAIN UPDATED ON 3/29/10 – The E.S. case was appealed. Recently, the New Jersey Superior Court, Appellate Division affirmed the decisions below, holding that a life care contract between a nursing home resident and her daughter, in which the resident paid her daughter a lump sum for the future provision of personal care services, was not a transfer for fair market value for the purposes of Medicaid eligibility. (I blogged about the appellate division’s decision here.)