When a person applies for Medicaid to pay for nursing home care (or assisted living or in-home care), they have to be mindful of whether transfers of assets will result in a denial of benefits. This denial is called the “transfer penalty,” and the 5-year Look-Back rules capture most transfers that occurred within the 5 years preceding the application. There are a handful of exceptions to the penalty. One of those exceptions has to do with an applicant who transferred their home to their “caregiver child.” If all the criteria are met, there will be no penalty for that transfer under both federal and state law.
The federal Medicaid law at 42 USC 1396p(c)(2)(A)(iv) says there is no penalty for transfer of the home to ” a son or daughter of such individual … who was residing in such individual’s home for a period of at least two years immediately before the date the individual becomes an institutionalized individual, and who (as determined by the State) provided care to such individual which permitted such individual to reside at home rather than in such an institution or facility.” The New Jersey regulation at N.J.A.C. 10:71-4.10 (d)4.is the same as the federal that I just quoted, but adds “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 and 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.” A diagnosis such as Alzheimers Disease is an important part of the overall evidence of the arrangement.
So there are several elements to be proven, and the burden of proof is always on the applicant. The care that was provided has to meet the criteria in the New Jersey regulation. This is becoming more and more contentious as the State imposes extra unpublished standards. In addition, the child has to reside in the applicant’s home for 2 full years immediately preceding the date that the applicant moves out to the nursing home or assisted living.
In the recent decision in M.K. v. Div. of Med. Assistance and Health Serv., (New Jersey App. Div. 2016) the Appellate Division affirmed a transfer penalty that was imposed on M.K. who had transferred her house to her daughter, J.K. The daughter resided with her mother and provided the required level of care. However, the caregiving didn’t satisfy the 2-year requirement, because within that 2-year period, M.K. actually was out of the house and residing with her son for 5 months.
Each of these cases is fact sensitive, but before transferring the property, a careful analysis of the impact on Medicaid eligibility is crucial.
Call us for advice and representation on Medicaid asset transfer planning, applications and appeals … 732-382-6070