Givebacks When Transfers Have Been Made to More Than One Person

The concept of givebacks has been previously discussed (see post 99). Basically under the new law and prior law, givebacks undo a penalty pro-rata. As indicated in such post, givebacks are particularly significant in the current law since they undo the onerous penalty provisions.

The issue arises if transfers have been made to two people and the Medicaid authorities refuse to allow the transfers to be considered “exclusively for another purpose” (see post 43). The question arises if transfers are made to two individuals and Medicaid has determined that the transfers were for a purpose other than to qualify for Medicaid. The State takes a hard line on allowing the exclusion. Therefore, to negate the penalty, the monies must be given back. However, assume that one of the donees does not have sufficient funds. The question becomes can the other donee repay so that the problem of the dual transfers is deemed cured. Several Medicaid supervisors have indicated that the wealthier donee (who has funds) can reverse the transfer penalty for both donees by returning all of the funds himself. This is a viable solution to a difficult problem.

Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© February 2011, Post 107

Issues to Consider When a Disabled Individual Under Age 59 Seeks Medicaid Eligibility

Often an individual becomes disabled early in life. For Medicaid purposes, a (d)(4)(A) trust for the benefit of the individual is a method of establishing an excludable resource so long as the state is the remainderman.

Another salient point is the fact that the individual will generally be receiving disability income payments. Unfortunately, such continuing payments help defray Medicaid's cost and reduce the Medicaid reimbursement rate, and therefore, do not serve to benefit the individual.

Depending upon the nature of the individual's disability, it is extremely important that there be a power of attorney for the individual so that assets can be accessed if the individual becomes incompetent.

As discussed in Post 21, as with any person qualifying for Medicaid, it is extremely important that the will or non probate assets of another not pass to the disabled individual, which would render the person ineligible for Medicaid.

Also, keep in mind that as with any other Medicaid recipient, if the "disabled child" owns property jointly with another, the property is an "inaccessible resource", which would render the property protected. If the disabled child is not a family member seeking Medicaid, Post 42 discusses the fact that transfers to the disabled child are exempt.

Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© February 2011, Post 136

Apportionment of Transfer Penalty When Community Spouse Enters Nursing Home

Transfers by the spouse of an applicant are considered in determining the Medicaid eligibility of the individual. Under both the MCCA and the Deficit Reduction Act, such transfers will also be considered again in determining eligibility for a community spouse who subsequently was institutionalized. That is, transfers by a community spouse who was subsequently institutionalized resulted in a double penalty. OBRA '93 requires that a "reasonable methodology" be employed to apportion the period of ineligibility between the applicant and a transferor-spouse who is subsequently institutionalized.

Example: Individual is in nursing home. Transfer of assets by spouse results in a 20-month penalty period for individual. Eight months after the transfer, spouse is institutionalized. The remaining penalty period of 12 months is to be apportioned. Presumably, six months will be allocated to each so that individual's period of ineligibility due to the transfer will total 14 months.

Under the Deficit Reduction Act, this allocation is particularly onerous as the transfer is deemed to have occurred at the date the individual would be otherwise eligible but for the transfer.

Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© February 2011, Post 135

Planning in the Event a Child Requires Nursing Home Care Before a Parent

In Post 85, I discussed the advantage of having a trustee with sprinkled powers amongst several beneficiaries, including elderly parents and other relatives.

The theory of such trust is it would be immune from creditors of the wayward child and should not be an available resource for the parent beneficiary.

Assuming an independent trustee and a child requires nursing home care before the parent. The child is one of the remaindermen of the trust. If the child goes into a nursing home, there would be an argument that the trust is not an available resource. However, the child's remainder interest would render the child ineligible upon receipt and death of the other beneficiaries.

The solution to such problem in the event the child enters the nursing home (to avoid the possibility of receipt of the remainder interest), would be a distribution by the trustee to a healthy child.

Such distribution should consider the following:
1. The trusts should not have mandatory "kickout" provisions which refer to Medicaid eligibility - N.J.S.A. 30:4D-6f.
2. The distribution should not be deemed a transfer. That is, statutory provisions against "trigger trusts" only apply to inter-vivos trusts under the federal statute - 42 U.S.C. 1396p(d)(3)(B)(ii).
3. Therefore there would be no resource of the child other than any funds the child may have and the distribution would not trigger the transfer rules.


Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© February 2011, Post 134

Ideal Planning for a Potential Medicaid Applicant with a Disabled Child

Assume an individual who is elderly but does not need nursing home care has one child, who is disabled. The individual has a house and several hundred thousand dollars.

The plan would be to transfer all the assets to the disabled child, which would be an exempt transfer. The disabled child would then use the monies transferred on the care of the individual.

Should the individual go into a nursing home, there would be no transfer. That is, the monies retained by the disabled child would be exempt from the transfer rules as would the monies used by the disabled child for the applicant.

Also, since the home is out of the applicant's "estate", the lien would not apply.

Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© February 2011, Post 133