Gifting the Community Spouse Resource Allowance: How Will Medicaid Treat this Gift

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

One of the biggest problems in getting Medicaid to pay for the nursing home costs of a loved one is gifting money and property to family members that could have otherwise been used to pay for long term care costs.  Your County Board of Social Services will not approve Medicaid for a period of time if your property is simply given away with nothing in return.  But what about money for the spouse who does not go into the nursing home, referred to as the “community spouse?”  Can money be set aside for him or her to take care of his or her needs while the other spouse is in a nursing home?  The answer here is yes.  A community spouse is allowed to a portion of his/her savings for his or her benefit.  This is called the community spouse resource allowance, or CSRA, and is calculated as of the date of application.  Normally, the Medicaid regulations prevent the community spouse from gifting the couple’s resources to children, family, or friends.  But what about the money that is titled in the community spouse’s name that counts towards the CSRA?  A recent decision from an administrative law judge (ALJ), POONG CHA, Petitioner, v. MORRIS COUNTY BOARD OF SOCIAL SERVICES, Respondent., tackles this issue.

The petitioner was admitted to a nursing home in 2011, and spent down his assets until 2012.  The petitioner and his wife opened separate bank accounts, and the wife then deposited the CSRA amount (which was $109,900 in 2012) into the account.  She then gifted each of her four children $13,000 after the CSRA was calculated, but before the application for Medicaid benefits was made.  The ALJ stated on several different occasions that if had she made these gifts after the date that the petitioner was found eligible; the transfers would not have negatively affected the petitioner’s eligibility.  However, because they were made before the application was filed, the transfers were penalized.  The wife testified that she had spent her life as a clergy spouse, and that the $109,900 was a lot of money, so she wanted to gift the children the money, who needed it more than her.  She did not realize that the timing of the gifts would make her husband ineligible, which the ALJ mentions defies the reason why there is a penalty period.  He therefore concluded that the transfers were made for a reason other than to qualify for Medicaid, and reversed the imposition of the penalty period.

This case demonstrates two concepts.  First off, the spouse can gift to his/her children in an amount that represents the CSRA.  It also states that the regulations specify that gifts should not be made until after the application date, as the CSRA calculation is “information prior to eligibility,” even though in this case the petitioner’s penalty period was reversed.  So if you do decide to gift your CSRA exemption, do it after the date you are found eligible to avoid the headache of explaining why the gifts of the CSRA were made and why they should not affect the penalty period.

To discuss your NJ Medicaid 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.