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Establishing Transfers Made Other Than for Medicaid Benefits Qualification

Posted by Thomas Asbury | May 05, 2023 | 0 Comments

There is a look-back time when someone requests Medicaid coverage because they require long-term care. If the applicant is institutionalized and has made a Medicaid application, the Medicaid agency will take a look back a few months prior to the ordinarily qualifying period. The look-back time is thirty months for California and sixty months for the rest of the states.

If the applicant makes transfers for less than fair market value during the look-back period, it is presumed that the transfers were intended to reduce the applicant's resources to the relevant individual resource allowance in order to qualify for Medicaid services. After that, the applicant would be subject to a penalty term during which they would lose their eligibility for benefits. By demonstrating that the assets were transferred for a reason apart from meeting the requirements for Medicaid long-term care services, the applicant can refute this presumption. The applicant may attempt to disprove the presumption by demonstrating that, as they were not sick and in need of treatment at the time the transfers were made, they were not thinking about becoming Medicaid eligible. To demonstrate a pattern of giving before Medicaid was required would be another strategy.

In a recent instance, Victoria had sent money to her kids in various ways before being identified as having Parkinson's disease in 2016 and requiring care in 2018. The first stage in her case to refute the presumption was to demonstrate that she was not unwell prior to the 2016 diagnosis after being penalized for all the transfers. Victoria provided supporting evidence, including medical records and testimonies. Victoria's dementia symptoms, according to the state, began to manifest in the years before 2016. The court, however, rejected that argument, stating that "The fact that a person of advanced age with chronic medical conditions may be foreseeable need for nursing home care is not dispositive of the question whether a transfer by such a person was made for the purpose of qualifying for such assistance." Matter of Collins v Zucker, 144 AD3d 1441, 1444 [3d Dept 2016].

The court next considered each transfer to see if it was undertaken with Medicaid eligibility in mind or not. Victoria has a lengthy history of financial support for her daughter. The court determined that transfers to the daughter made prior to the diagnosis of Parkinson's disease did not qualify for Medicaid benefits. Due to Victoria's "continuous practice of gift-giving to her daughter, were made at a period when petitioner was financially secure and were made prior to the abrupt worsening of her health," this is the case.

Additionally, Victoria had given one of her sons $10,000 in 2014. He had gotten a loan from Victoria and used it to buy an automobile. Because a note was written and the transfer conformed with Medicaid regulations, the court determined that it should not be fined. When the underlying loan is actuarially sound based on the lender's life expectancy, provides for equal payments over the course of the loan with no deferrals or balloon payments, and includes a provision prohibiting cancellation upon the lender's death, the assets conveyed through a note or a mortgage during the look-back period are considered to be transfers for full market value. 42 USC 1396p(c)(1)(I) and Social Services Law 366(5)(e)(3)(iii) both mention this. However, with the diagnosis of Parkinson's Disease in 2016, the son stopped paying the loan. The transfer amount was fined because the court determined that the remaining sum was waived in order to qualify for Medicaid.

A second son received a $150,000 loan to launch a yogurt company. The company, however, was a failure. The son signed a contract for the sale of assets, and Victoria's husband collected roughly $55,000 from the sale of equipment. There was no means to demand repayment for the remaining balance of the loan because the company had no other assets. According to the court, the loan agreement met with Medicaid regulations and laws. The loan was also arranged long before her physical condition was discovered; therefore, this transfer was not punished.

Both boys received yet another loan. The transfer would be punished, the court said, because it was made after her diagnosis and the loan conditions did not follow Medicaid regulations. The memo specifically included balloon payments.

About the Author

Thomas Asbury

Mr. Asbury is a graduate of the Wharton School of Business at the University of Pennsylvania. Before attending law school, Tom worked in the Internet sector as the Webmaster for the NFL’s Jacksonville Jaguars. While in law school, he published a law review article entitled Alternative Sentencing Theory, 3 Fla. Coastal L. J. 41 (2001), which identifies a constitutional framework within which defendants charged with alcohol and drug-related crimes can be remanded to faith-based programs rather than prison for non-violent offences. The logic is quite simple—as sobriety becomes the norm and addictions subside, so too do the often-accompanying crimes. His professional experience includes estate planning, corporate law, compliance law, guardianships, trademarks, probate, trust and probate litigation, including trust and will contests, administrative law, and consulting for business entities. Mr. Asbury has also lectured for NBI Seminars in the areas of Probate, Wills, Trusts, and Estates. Tom has also served on the Penn Admissions Committee for years as an alumni interviewer and is an international lecturer on the focus and philosophy of Ivy League admissions.


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