Elder Law

A NJ Administrative Law Judge Recently Ruled That A Medicaid Applicant?s Prepayment For Care To Be Provided In The Future To A Family Member Under A Personal Services Contract Is A Transfer Of Assets For Less Than Fair Market Value, Resulting In The Imposition Of A Penalty

By dvanar

In a trio of cases which were consolidated because the cases presented a common question of law, NJ Administrative Law Judge Joseph A. Paone recently ruled that a Medicaid applicant?s prepayment for personal care services to be provided in the future to a family member under a Life Care Contract constituted a transfer of assets for less than fair market value, subjecting the applicant to the imposition of a penalty period under the Medicaid program. C.S. v. Division of Medical Assistance and Health Services and Union County Board of Social Services, et al., OAL Docket No. HMA 1036 ? 08, Initial Decision (September 8, 2008).

Each of the petitioners in the consolidated cases entered into a written contract with a relative which obligated the relative to provide life care services in exchange for a prepaid fee based on the actuarial life expectancy of that petitioner. Petitioners asserted that the contracts were evidence that the payments made for services to be provided in the future were bona fide. Petitioners applied for Medicaid but were denied eligibility after respondents county welfare boards and the State Medicaid agency imposed transfer penalties, holding that each petitioner?s payment to a relative under the contract constituted an uncompensated transfer of assets, subjecting each petitioner to a penalty period.

Petitioners filed appeals from the denial of Medicaid benefits, requesting Fair Hearings. Respondents then moved for summary decision in each case. On appeal, ALJ Paone ruled that, since the value of an asset under the Medicaid regulations [N.J.A.C. 10:71-4.1(d)] is defined as ? the price that the resource can reasonable be expected to sell for on the open market in the particular geographic area . . .?, and since each Life Care Contract prohibited the sale, transfer or assignment of any rights or benefits conferred by the contract,

[Each contract] lacks intrinsic value and, thus, possess no fair market value. Consequently, the sum paid to a relative for personal care services pursuant to the Life Care Contract constitutes a transfer of assets for less than fair market value.

A copy of the C.S. v. Division of Medical Assistance and Health Services and Union County Board of Social Services case can be found here - cs-v-dmahs5. An appeal of the ALJ?s decision is planned.

Full post as published by Law Office of Donald D. Vanarelli Blog on October 07, 2008 (boomark / email).