In determining Medicaid eligibility for someone seeking institutionalized benefits, counties must review five years of financial history.- Under the regulations, “[I]f an individual . . . (including any person acting with power of attorney or as a guardian for such individual) has sold, given away, or otherwise transferred any assets (including any interest in an asset or future rights to an asset) within the look-back period,” a transfer penalty of ineligibility is assessed. N.J.A.C. 10:71-4.10(c). “A transfer penalty is the period of time Medicaid will not pay benefits because of the transfer of financial resources by the applicant at less than fair market value within five years.
Transfers of assets or income are closely scrutinized to determine if they were made for the sole purpose of Medicaid qualification.” Congress has imposed a penalty for the disposal of assets for less than fair market value during or after the five (5) year look-back period. Its purpose is “intended to maximize the resources for Medicaid for those truly in need.”
Limited exemptions to the transfer penalty rules exist. For example, the caregiver exemption provides that an individual will not be subject to a penalty when the individual transfers the “equity interest in a home which serves (or served immediately prior to entry into institutional care) as the individual’s principal place of residence” and when “title to the home” is transferred to a son or daughter under certain circumstances. The son or daughter must have “resid[ed] in the individual’s home for a period of at least two years immediately before the date the individual becomes an institutionalized individual” and “provided care to such individual which permitted the individual to reside at home rather than in an institution or facility.” This exemption mirrors the federal Medicaid statute. 42 U.S.C.A. § 1396p(c)(2)(A)(iv). The federal statute calls for an explicit exemption from the transfer rules and is meant to compensate the child for caring for the parent.
The New Jersey regulations regarding this type of transfer exemption are supposed to be based on the federal statute. The statute provides that if the “equity interest in a home” is transferred by title to a son or daughter who provided care to a parent while “residing in such [parent’s] home” that prevented the parent’s institutionalization for at least two years, the transfer is exempt from penalty. 42 U.S.C. § 1396p(c)(2)(A)(iv). The care provided must exceed normal personal support activities and Petitioner’s physical or mental condition must be such as to “require special attention and care.” N.J.A.C. 10:71-4.10(d).
In reviewing the caregiver exemption, the N.J. Appellate Division has noted that proof must be forthcoming specifically establishing each requirement of the exception to obtain its application.”
In a recent N.J. case, the petitioner’s daughter was seeking to have Petitioner’s 50% interest in a home they shared transferred to her under the caregiver exemption. Petitioner’s daughter owned the other 50% interest in the property. Petitioner was admitted into a nursing facility in December 2019. Petitioner filed an application for Medicaid benefits which was granted. Petitioner requested a caregiver exemption. The County denied Petitioner’s request for the caregiver exemption. Seems harsh under these facts, doesn’t it?
But there was nothing in the record to show that the home at issue was ever transferred to Petitioner’s daughter. Moreover, no penalty was imposed on Petitioner’s receipt of Medicaid benefits until her death. Here, as the property interest was never transferred from the Petitioner to her daughter and a penalty was not imposed, no exemption could be granted. The requests for the caregiver child exemption should have been considered by BCBSS after the ownership of the property was transferred and before approval was granted. Accordingly, Petitioner was not entitled to a caregiver exemption.
The takeaway of this case is as follows: If you intend to apply for the child caregiver exemption, you must transfer legal ownership of the home to the caregiver child before you apply for Medicaid, otherwise it is too late.
To discuss applying for Medicaid in NJ, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.
By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County, NJ Medicaid Attorney