Personal Care Agreement Payments Made by Medicaid Applicant Are Subject to Penalty Period

A New Jersey appeals court holds that transfers made from a Medicaid applicant to her daughter pursuant to a care agreement were not made in exchange for fair market value.P.W. v. Division of Medical Assistance and Health Services (N.J. Super. Ct., App. Div., No. A-4756-11T3, April 29, 2014).

M.Y. signed a care agreement with her daughter, Paula, in which Paula would provide room and board in return for $2,000 a month, which included $800 for rent and $1,200 for services. The services included preparation of meals, cleaning, and assistance with bathing and dressing. M.Y. lived with Paula for two years. During this period, M.Y. also transferred $16,000 to Paula's daughter.  M.Y. briefly entered an assisted living facility before moving in with her other daughter, Gina, for two years, transfering $46,595 to Gina.

M.Y. entered a nursing home and applied for Medicaid benefits. The state determined the $1,200 monthly payments were transfers for less than market value and imposed a penalty period. When M.Y. appealed, an administrative law judge ordered that the $1,200 payments be excluded from the penalty period, but the state rejected the ALJ's decision. M.Y. appealed to court.

The New Jersey Superior Court, Appellate Division, affirms the imposition of the penalty period, holding there was no evidence M.Y. received fair market value in exchange for the assets transferred to her daughters and granddaughter. The court notes that there was no explanation of how the $1,200 rate was reached and there was no agreement between M.Y. and her granddaughter or Gina. According to the court, "in evaluating whether [M.Y.] had overcome the presumption that assets were transferred to establish Medicaid eligibility, all of the transfers to family members made during the look-back period must be scrutinized."

For the full text of this decision, go to: http://www.judiciary.state.nj.us/opinions/a4756-11.pdf