Mother's Payments to Daughters and Granddaughter for Caregiving Result in Medicaid Transfer Penalty

A New Jersey court has upheld a Medicaid agency's determination that a Medicaid applicant did not receive "fair market value" for the payments she made to her daughter for caregiving.

On November 15, 2005, Mary signed a "Care Agreement" with Paula under which Paula would provide room and board for her mother in return for payment by Mary of $2,000 per month, consisting of $800 in rent and $1,200 in services. Some of the services identified in the contract included preparation of three meals per day; weekly cleaning and laundry; assistance with bathing, dressing, hair care, and shopping; and assistance in financial management.

Mary lived with Paula from November 2005 to November 2007. During this period, Mary paid Paula $2,000 per month for four months, between March 2006 and June 2006 and for seven months between January 2007 and July 2007, for a total of $22,000.

Between November 2005 and July 2007, Mary also transferred $16,000 to her granddaughter Reba.

In May 2008, after five months in an assisted-living facility, Mary moved in with her daughter Gina and remained there until April 2010. During this 24-month period, Mary transferred $46,595 to Gina. Unlike with Paula, Mary did not have a written care agreement with Gina.

In May 2010, Mary moved into a nursing home. In December 2010, Mary applied for Medicid benefits. The Bergen County office denied her application, finding that all of the payments she made to Paula, Reba, and Gina were Medicaid-disqualifying transfers.
Mary appealed. An administrative law judge upheld the decision, but excluded the $1,200 monthly payments for services from the penalty period. The State Medicaid Director, however, rejected the ALJ's order and reinstated the entire penalty period.
The Director found that the Care Agreement was a "mechanism for transferring resources" to Paula, and Mary had not received fair market value for the $1,200 in monthly services as set forth in the Care Agreement.
On appeal, the decision was affirmed by the court. Under Medicaid law, assets transferred during the "look-back period" are presumed disqualifying unless the applicant presents "convincing evidence that the assets were transferred exclusively for some other purpose."

Mary failed to rebut that presumption, the court held. The record did not delineate how Mary and Paula decided on the $1,200 monthly rate or what was to be done and for what length of time to earn $1,200 per month.
Furthermore, the evidence showed that while Mary was living with Paula, some payments were made to Reba, who was 13 years-old, during a time when she was in school. Mary had offered no evidence to show why Reba would receive these payments other than that Reba looked after her grandmother while Paula, who worked evenings, was not available. There was no evidence that Reba serviced three nutritiously balanced meals a day, provided assistance with bathing or with bill paying and money management.

Finally, the Care Agreement was made between Mary and Paula only, and did not address the payments to Gina and Reba.
The penalty based upon $71,611.84 in transfers of less than fair market value was upheld.
P.W. v. Div. of Medical Assistance and Health Serv., Superior Court of NJ, App. Div. (April 29, 2014)

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