Court holds Two Year Caretaker Exemption Unavailable for Transfer of Home Absent Medical Specific Evidence

A New Jersey appeals court has held that the caregiver exemption does not apply to a Medicaid applicant who could not document that her condition required her daughter to care for her for a full two years before she entered a nursing home. R.K. v. Division of Medical Assistance and Health Services (N.J. Super. Ct., App. Div., No. A-2881-17T1, Dec. 5, 2019).

R.K. transferred her home to her daughter in 2011. Her daughter cared for her in her home until April 2015, when she entered a nursing home and applied for Medicaid. The state imposed a penalty period due to the transfer of the house.

R.K. appealed, arguing that because her daughter had cared for her for two years before she entered the nursing home, the caregiver exemption should apply to the transfer of the house. The caregiver exemption is one of a number of exemptions that protect transfers of assets from impairing Medicaid eligibility. Even after entering a nursing home, you may transfer any asset to the following individuals without having to wait out a period of Medicaid ineligibility:

• Your spouse (but this may not help an applicant become eligible since the same limit on both spouse's assets will apply);
• A trust for the sole benefit of your child who is blind or permanently disabled;
• Into trust for the sole benefit of anyone under age 65 and permanently disabled.  

In addition, an applicant may transfer their home to the following individuals (as well as to those listed above):

• A child who is under age 21;
• A child who is blind or disabled (the house does not have to be in a trust);
• A sibling who has lived in the home during the year preceding the applicant's institutionalization and who already holds an equity interest in the home;
• A "caretaker child," who is defined as a child of the applicant who lived in the house for at least two years prior to the applicant's institutionalization and who during that period provided care that allowed the applicant to avoid a nursing home stay.

At the hearing, the administrative law judge (ALJ) determined that the caregiver exemption should apply, relying on records that R.K. received hospice care beginning in November 2013. The state rejected the ALJ’s determination because R.K. provided no medical records of her condition from March 2013 to November 2013. R.K. appealed.

The New Jersey Superior Court, Appellate Division, affirmed the penalty period. According to the court, because “there were no medical records demonstrating that R.K. required a special level of care from March 2013 up to November 2013,” R.K. did not demonstrate that her daughter “provided a level of care that allowed R.K. to reside at home rather than an institution or facility” for a full two years.

Obviously, live-in caregivers should obtain and secure medical evidence of impairment.  If you find yourself in this situation, contact our office.  We will provide you a form, suitable for Departments Medicaid to evidence that the provided care allowed the senior/applicant to avoid a nursing home stay..