State Violates Federal Pre-emption by Limiting Post Eligibility Treatment of Income for Pre-Eligibility Medical Expenses (PEME) for Three Months

This relates to amounts that may be due to a nursing home if an individual is dilatory in applying for Medicaid.

Clearly, as indicated by the HCFA-PM-85-3 statement, this has been the federal law since 1985. However, Med. Com. No. 10-07 indicates its applicability to state law effective January 1, 2010. Previously, state law had been less restrictive and it allowed PEME to be paid back without the three month limitation. Therefore, since the state's position was less restrictive than the federal law, there was no violation of federal pre-emption.

The state, by limiting eligibility to pay such cost for three months retroactively, violates federal pre-emption in that the state was less restrictive in allowing payments in full. Therefore, its change in position in denying PEME to all applicants even before the date of Med. Com. No. 10-07 violates federal pre-emption, and is incorrect.

Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© March 2011, Post 140

The Nature of Joint Bank Accounts

Pursuant to N.J.S.A. 46:2B-11, every account with two names is deemed to be a "joint" bank account under New Jersey law. That is, it is irrelevant as to whether the language is "or", "and" or just has joint names. The account is deemed to be owned by each person in its entirety.

Therefore, as pointed out in many of my blogs, it is dangerous to maintain a joint account in the names of the applicant or others, since the presumption will be that all the funds in the account are owned by the applicant. This presumption can be rebutted by specific proof that the co-holder contributed to the account. In such case, a withdrawal of the co-holder's funds would not be a transfer.

Post 1 points out that it is recommended that joint accounts between applicant and spouse be terminated within 90 days pursuant to the 90-day rule.

The nature of joint accounts is governed by state law and maintaining a joint account between the applicant and another could endanger Medicaid eligibility. In Post 21, I pointed out that if the co-holder predeceases the applicant, the monies would be presumed to pass to the applicant by operation of law, which raises another problem.

The recommendation is that joint accounts between the applicant and another, particularly the spouse, be terminated.

Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© March 2011, Post 139

Inaccessible Resources Revisited

In Post 48, I discussed the relevance of inaccessible resources as being excludable for Medicaid eligibility purposes. The theory is that a countable resource is only such that can be converted to monies to pay nursing home costs.

Examples presented were joint real estate if the co-owner refuses to liquidate, property in probate, real estate which may not comport with zoning requirements and unpaid funds such as future salary.

However, this is an area that allows for creativity. For example, as discussed in my Webinar with Carol Johnston on Ethical Dilemmas for Elder Law Practitioners, I raised the possibility that stock of a closely held corporation might be deemed an inaccessible resource if subject to a buy-sell agreement. Also, monies that are not currently payable such as royalties, constitute inaccessible resources as they are not immediately available. The definition of inaccessible resource is not exclusive, but provides examples. Therefore, creativity is required in this area.

Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© March 2011, Post 138

The Role of the Constitution in Elder Law

The theme throughout many of my blogs has been the concept of federal pre-emption. That is, the federal law supersedes state law except if state law is less restrictive. For example, Post 113 indicates that under the concept of federal pre-emption, reverse half-a-loaf planning should be acceptable. That is, although the state and federal law appear to conflict, state law is less restrictive and should allow such planning.

Similarly, the state is misguided in its position that the disinheritance of an individual in a nursing home results in a transfer. Section 42 U.S.C. 1396(p)(e) requires an affirmative act for a transfer and the state's law is more restrictive in that the state is imposing a penalty for a transfer on the failure to exercise the elective share, which is not an affirmative act, but rather an option.

There are numerous examples of such violation. One more which is rather important is the refusal of the state to honor spousal refusal. As pointed out in Post 78, spousal refusal and the right of the community spouse to contribute is to be allowed if the state has the right to pursue the community spouse. This is clearly the case in New Jersey as the state can stand in the shoes of the applicant and sue the community spouse for any non-payment. Notwithstanding, New Jersey does not follow this approach.

The concept of federal pre-emption and the extent to which a state follows a law varies from jurisdiction to jurisdiction. Therefore, not only is knowledge of the federal statute absolutely necessary, but the interpretation by the state is even more significant.

Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© March 2011, Post 137

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