The case has some pretty compelling facts. G.B. was a senior recipient of 30 hours a week of in-home care through a Medicaid waiver program. G.B.'s daughter, M.B.-M. also lived with G.B. and helped to care for her. Of course, there was care needed since the in-home care G.B. received from Medicaid constituted less than twenty percent of the weekly time for which care was necessary. Ostensibly, the daughter M.B.-M. either personally provided or arranged and managed such care.
G.B. sold her house to M.B.-M. and received a profit of $27,320.29. Rather than simply gifting the entire home to the daughter, and the daughter receiving all of the proceeds, they entered into a more nuanced transaction benefiting both mother and daughter. G.B. reduced the net proceeds of the sale she could have received by crediting M.B.-M. $42,000 in equity as a gift. One can assume that the transaction was recommended to free assets for G.B., and to immediately qualify her for Medicaid in the event that institutionalization became necessary. Perhaps the motivation was, or included intent to compensate M.B-M. for her responsibility. Regardless, they must have been comfortable in the legality of the transaction given that transfers of a home to a care giving child are specifically permitted by Medicaid. By permitting transfer of a home to a child caregiver, the law encourages a family to provide care that will keep a loved one out of a skilled nursing facility, and of course, off of the growing list of Medicaid recipients requiring long term institutional care. Despite the daughter's sacrifice for her mother, and it's benefit to the state, when Medicaid discovered the transfer, it deemed the transfer improper, and imposed an improper transfer penalty, meaning that G.B. was not eligible for benefits for a period of time.
G.B. appealed, arguing that the transfer of the home equity to M.B.-M should be exempt because it was a transfer to a caregiver child. After a hearing, the administrative law judge (ALJ) agreed. The state, nonetheless, rejected the ALJ's conclusion, ruling that M.B.-M was not a caregiver child because in receiving 30 hours of care per week, G.B. was legally an institutionalized individual. Yes, that's right; because she received a Medicaid waiver providing care in her home for a quantity of time that would be considered a part-time job, she was legally institutionalized! Following G.B.’s death, M.B.-M, her executor, appealed pro se (meaning without the benefit of counsel).
The New Jersey Superior Court, Appellate Division, Estate of G.B. ex rel. M.B.-M. v. Division of Medical Assistance and Health Services (N.J. Super. Ct., A.D., No. A-5086-12T1, Sept. 15, 2015). shockingly affirmed the state's decision, holding that the caregiver exemption does not apply. According to the court, the 30 hours of care a week that G.B. received was the functional equivalent of being an institutionalized individual. The court ruled that "although [M.B.-M] cared for her mother during the relevant time period, the key factor that permitted G.B. to remain in her home until 2009 was the Medicaid assistance she received through the services provided by the [state]."
So, an in-home Medicaid waiver recipient's gift of her house to her daughter does not fall under the caregiver exemption because the reason the mother was not in a nursing home was due to the in-home Medicaid benefits she received for care 30 hours a week, and not her daughter's care the other almost 170 hours a week (note, by the way that if she slept 10 hours a day, during which arguably there was no care need, that still left nearly 100 hours a week for which the daughter remained responsible). No good deed goes unpunished? At a minimum, the holding will cause families pause when relying upon the caregiver exemption; perhaps that is the intent of the state's position.
There is a possible explanation for such a narrow reading and application of the caregiver exemption the State of New Jersey. New Jersey is a filial responsibility state. See, e.g., NJ Rev Stat § 44:4-102 (2013). Only time will tell whether the State is moving to enforce its filial responsibility law in order to force children to pay for the care costs of their indigent parents. Looking at the case from a "filial responsibility" perspective, the daughter's care was her legal responsibility, meaning that it was only the state that did anything extraordinary by providing home care for thirty hours a week Such a view would explain the court's dismissiveness of the daughter's care, and the elevation of the state's benefit.
At any rate, with filial responsibility in play, the transfer of the proceeds from the sale of the house would have remained available to the state in resource recovery. Collecting the proceeds by imposing an improper transfer penalty was simply a more efficient mechanism for the the state to minimize its cost and expenses. This supposition is, upon first consideration admittedly "far fetched," but we submit is no more "far fetched" than the state's keeping from a caregiving daughter some morsel from the sale of the home to which she would have seemed obviously entitled.
At any rate, with filial responsibility in play, the transfer of the proceeds from the sale of the house would have remained available to the state in resource recovery. Collecting the proceeds by imposing an improper transfer penalty was simply a more efficient mechanism for the the state to minimize its cost and expenses. This supposition is, upon first consideration admittedly "far fetched," but we submit is no more "far fetched" than the state's keeping from a caregiving daughter some morsel from the sale of the home to which she would have seemed obviously entitled.
For the full text of this decision, go here.
Note: We have added a label for "No Good Deed Goes Unpunished."
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