Followers of this blog know that if a person applies for Medicaid to pay for nursing home care (or assisted living or home care), they have to provide five years’ of financial records and prove to the agency just what they spent every dollar on during the five year look-back period which immediately precedes the application. If the applicant can’t prove that the dollars were spent on himself or herself, the agency presumes that the money was given away (“gifted” or “transferred.”) That in turn raises the presumption that the purpose of the gift was to qualify for Medicaid. And that in turn will usually result in a transfer penalty period. Medicaid won’t pay for the care during a penalty period.
This is an overwhelming challenge for most people. Although the general burden of proof in administrative agency cases is “prove by the mere preponderance of the competent evidence,” the burden on the applicant in Medicaid cases is “convincing evidence.” It’s not quite clear just what that means. The standard of proof in criminal cases is “beyond a reasonable doubt,” and the standard in court cases such as guardianship, Will contests and trust disputes is generally “clear and convincing evidence,” which is some place between the criminal standard and the administrative standard. In a new decision by our Appellate Division, the court sustained the agency’s finding that the applicant had failed to provide convincing evidence that the funds were spent and not gifted. N.K. vs. Div. of Med. Assistance & Health Services, July 19, 2016 (Sppellate Div.).
The applicant, N.K., lived in the community with a home health aide. She said that she paid the aide $1,000 a week [not an unusual wage for that work]. She had withdrawn $69,200 in cash from her checking account over the course of the look-back period, and could not prove just how she spent her money. As a result, a 7 month, ten day penalty period was imposed.
Five years is a long time, and for elderly individuals living in the community with a cash lifestyle, it may be impossible to prove just what they spent their dollars on. They go to the store; they go out for dinner or a movie or a show; they pay for a car repair; maybe they take out a hundred dollars and keep it in the car to pay tolls with. The person who is developing Alzheimers dementia may be prone to discarding all stray papers. The Medicaid applications are particularly problematic when aides are paid in cash with no records or receipts, or when a child pays for everything out of his or her own account and then takes regular reimbursements without saving each receipt. The Agency regards every transaction with suspicion.
When entering that phase of life where the need for nursing home care is a distinct possibility — however one hopes to avoid it — you need to handle the financial arrangements carefully, always thinking about how you will prove that you have been spending, and not gifting, your funds.
Call us to prepare and file your Medicaid application, or for asset protection planning, or to represent you on an appeal of a Medicaid penalty …. 732-382-6070