Significant Change in State’s Position on Caretaker Agreements

At a meeting of Medicaid supervisors last week, a major change in the Medicaid law was adopted:


Payments by applicant for care and services provided by a child were initially discussed in Post 17 under the theory that such payments by an applicant are reasonable. Medicaid allowed payments by a parent to a child in the amount of approximately $13,000 in a case that I submitted. Justification for payment for such services was provided.

Subsequently, the State took a restrictive position and limited the payments pursuant to a Caretaker Agreement to the amount received by a nurse’s aide, which generally approximates to $10 per hour.

The State now has reconsidered its position and will revert to its prior stance on Caretaker Agreements that the amount reimbursed to a child can exceed its prior limitation and allow payments by the applicant to the child that are “reasonable” with respect to such services.

This is a major change in position and allows significant savings if the payments to the child are justifiable.

Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.


© May 2010, Post 80(2)

Unique Solution to Transfer by Applicant Prior to Representation

Transfers by an applicant after the Deficit Reduction Act present unique problems. (See Post 15). Various posts have discussed partial or complete solutions to such problems such as use of the monies for the applicant or return of the monies. However, any monies returned become resources of the applicant.

I was recently presented with a problem which again brought to my attention the significance of a caregiver’s agreement.

Assume the following facts:

1. Transfers by an applicant without the advice of counsel.
2. Intent to qualify for Medicaid in the near future.

There was a pre-existing care agreement and the applicant had substantial liabilities. I resolved this problem in the following manner:

1. The child returns the money to the potential applicant to undo the penalty.
2. Parent, depending upon the situation, can use the monies to pay debts, make payments pursuant to a pre-existing care agreement or spenddown either prior to entrance to a nursing home or after admission.

Pre-existing transfers require creativity for solutions. For example, in another matter, a sibling of the donee loaned monies to the donee who reimbursed the applicant who, in this case, had substantial debts and the monies reimbursed were immediately used for the spenddown. The children arranged between themselves for repayment of the loan.

Another common situation would be prior transfers and the parent having a substantial liability due to a reverse mortgage. Similarly, return of the monies would undo the penalty and the monies could be spent down immediately to pay the debt.

This discussion again stresses the point of reviewing all the facts and see if there is a possible solution to resolve what initially appears to be an unresolveable problem (see also Post 18).

Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.

© May 2009, Post 80

Dependent Child Revisited – Meaning of Dependency

Suppose a child is living in a potential applicant’s home because such child cannot live alone due to physical limitations. The child would clearly render the home an excludable resource as set forth in Program Instruction No. 85-8-9 (see Post 14).

If the parents were to go into a nursing home, the home would be protected under the aforementioned program instruction and the dependent relationship.

Since the child is also disabled, any assets transferred to such child would be free from transfer penalty (see Post 42).

The thought might occur that the transfer of funds to the child could hinder the dependent relationship and, therefore, render the house an includable resource. However, financial dependency is only one of the situations described in the program instruction. Other forms set forth as examples include medical, custodial or any other type of dependent relationship. Therefore, the broad definition of “dependent relationship” would allow immediate Medicaid as both the house and funds transferred are protected.

This post indicates the breadth and meaning of dependent relationship and points out that even financial independence would not ruin the excludable nature of the home.

Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.

© May 2009, Post 79

Spousal Refusal

The theme of many of these postings and programs that Janice Chapin, Esq. of Central Jersey Legal Services and I have conducted for the Institute of Continuing Legal Education (“ICLE”) has been the lack of attention by Medicaid to federal law (i.e. federal pre-emption). A major area for this contention relates to the concept of spousal refusal. That is, if a community spouse refuses to contribute his or her funds to the nursing home costs of an applicant, under what circumstances should Medicaid still be granted? The federal law basically states that Medicaid will not be denied if a community spouse refuses to contribute if the State has the right to sue the spouse for the costs that should be contributed.

The State of New Jersey again does not follow the federal law and has a list of onerous requirements for spousal refusal to be given effect (i.e. Medicaid granted despite the refusal). There are forms to be filled out and questions to be answered. The major requirements for spousal refusal (and the granting of Medicaid in New Jersey) are (1) a lengthy separation of at least 20 years, (2) non-cooperation of the community spouse, (3) at least three attempts to communicate with the community spouse.

The State then evaluates whether Medicaid should be granted.

It is a rare case in which the State will honor spousal refusal. Therefore, if spousal refusal is not granted, and the spouse has in excess of the resource requirement (currently $109,560), Medicaid will be denied.

Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.

© May 2009, Post 78