By Anthony J. Enea, Esq.
Pursuant to the provisions of the Social Services Law of New York, it is well established that certain asset transfers (gifts) will not result in a period of ineligibility for nursing home Medicaid. Theses transfers are commonly known as "exempt transfers" for Medicaid eligibility purposes. However, what is less commonly known is that certain transfers of assets (gifts), although they do not fall within the specifically enumerated categories of exempt transfers, can be given "exempt asset" transfer status, if satisfactory showings are made regarding the circumstances and intentions of the applicant for Medicaid with respect to the transfer in question.
Sections 366.5(d) and (e) of the Social Services Law provide that an individual will not be disqualified for Medicaid as a result of a transfer of an asset to:
(i) his or her spouse or to another for the sole benefit of the spouse; or
(ii) from the individual's spouse to another for the benefit of the spouse; or
(iii) to the individual's child who is blind or disabled, or to a trust established solely for the benefit of such child; or
(iv) to a trust established solely for the benefit of a disabled person under 65 years of age.
Additionally, one's primary residence ("homestead") can be transferred to certain specified persons without effecting one's eligibility for nursing home Medicaid:
(i) the individual's spouse ("spousal exempt transfer"); or
(ii) the individual's child, who is blind, disabled or under the age of 21; or
(iii) the individual's sibling, who has an equity interest in the home and was residing in the home for a period of at least one year immediately before the date the person became an institutionalized individual; or
(iv) the individual's child, who was residing in the home for a period of at least two (2) years immediately before the date the person became an institutionalized individual, and who provided care to the person which permitted her or him to continue residing at home rather than enter into an institution or facility. This is commonly referred to as a "caretaker child" exempt transfer.
The above described exempt transfers do not require the applicant for Medicaid to make any showings as to the circumstances surrounding the transfer or his or her intentions with respect thereto. What must be established is that the transfer complied with the stated statutory provisions, and was made to one the identified classes of persons, for example, spouse, blind or disabled child, etc.
However, the provisions of 365(d) and (e) of the Social Services Law permit an asset transfer to be considered to be "exempt" for eligibility purposes, if a "satisfactory showing" is made that:
(i) the individual or his or her spouse intended to dispose of the asset either at fair market value, or for other valuable consideration; or
(ii) the asset was transferred for a purpose other than to qualify for Medicaid; or
(iii) all assets transferred for less than fair market value have been returned to the individual.
Clearly, the provisions of paragraphs (i) and (ii) immediately above require that the applicant explain to Medicaid either at the time of the application or at a fair hearing his or her intentions with respect to the asset transfer in question, and may also require that the applicant's medical condition at the time of the transfer be explained. For example, in making a satisfactory showing that an asset was transferred for a purpose other than qualifying for Medicaid, the applicant would for example seek to show:
(a) That he or she was in relatively good health for his or her age at the time of the
transfer; and was not suffering or diagnosed with a medical condition that would necessitate institutional care;
(b) That he or she maintained an independent lifestyle at the time prior to the transfer, and
(c) That the transfer was made for purposes other than Medicaid eligibility such as for estate planning purposes. For example, a showing that he or she consulted with an accountant regarding the tax ramifications of the transfer would be of great relevance; and
(d) That he or she had a history of making gifts to family members.
In several recent cases appealing decisions made after a fair hearing, the appellants/ applicants were able to overturn the fair hearing decision by establishing that they were in excellent health at the time of the transfers, and that there was no evidence or indications present at the time the transfers were made that they would need a nursing home level of care. In one case, the appellant/applicant was also able to establish that members of her immediate family had fallen on hard times, and that she made the gifts to them to help them get through their financial difficulties and not for purposes of qualifying for Medicaid. She was also able to establish that she had a pattern of making gifts to her family and that the transfers in question were consistent with this pattern of gifting.
See Matter of the Appeal of Violet T. (FH#535873N) dated October 28, 2009 and Matter of Appeal of O.K. (FH#5307252M) dated November 23, 2009.
Social Service Law 366.5 (d) and (e) also provides that an individual will not be eligible for Medicaid as a result of the transfer of assets if denial will result in an "undue hardship". The standards to establish "undue hardship" are difficult to satisfy and a discussion of same is better suited for a much lengthier article.
In conclusion, the above stated illustrates how essential it is for the attorney representing an applicant for Medicaid to thoroughly investigate the facts and circumstances surrounding an asset transfer. While at first blush the transfer may appear to be a disqualifying transfer for eligibility purposes, a thorough analysis may reveal something totally to the contrary.