Funds Used to Repair a Grandson’s Home Were Not Deemed Transfers to Qualify for Medicaid

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Medicaid Eligibility Attorney

In a case out of New York, we recently read about a successful attempt in the States Supreme Court, (Appellate Division) to reverse the Department of Health and county department of Social Service’s imposition of a transfer penalty.  The controversy in this case involved the decedent’s transfer of $26,000 to her grandson by the decedent’s daughter.  Transfers in Medicaid are always looked at suspiciously, in New Jersey and across every state. The presumption in both New Jersey and in New York is that any transfers of funds to other(s) without fair market value in return are gifts made to qualify for future Medicaid assistance. This can be rebutted by the applicant showing that there was a purpose for the funds other than qualifying for Medicaid.

Here, the decedent, through her daughter/executrix, argued that the money was paid to the grandson to assist him with repairs to his home because the grandson, a veteran of the Marine Corps incurred a service-connected disability, and could not qualify for a mortgage.  The daughter took a home equity loan out on her mother’s house to help him, and the decedent used $25,000 of that money, over two years, to finance the grandson’s house repairs.  The transfers were found to be made for the purpose of repairing the house, not for qualifying for Medicaid, and the penalty was reversed.  The Court rejected the Department of Health’s reasoning that the deteriorating condition of the decedent at the time of the transfers made it foreseeable that the decedent would need nursing home care, and that the transfers therefor were made to qualify for Medicaid. Unfortunately for the state the evidence demonstrated that the transfers had a purpose other than Medicaid and the state’s inference was based on “speculation” (it almost always is).

This was a nice win for Medicaid applicants. It shows that some courts are willing to reverse administrative boards if they feel the decision was not based on the law but the bias of the department. The Court disagreed with the Department of Health’s logic that because the decedent’s health was starting to deteriorate, it was foreseeable that the transfer was made to qualify for Medicaid.  However the law states that to rebut the presumption, an alternate purpose for the funds must be shown, which the decedent did show but the Department of Health did not recognize, and so the penalty was reversed.

To discuss your NJ Medicaid Eligibility matter, 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 consultations if you are unable to come to our office.