Due Process Requires Proper Notice

The Appellate Division of the Superior Court of New Jersey recently decided an interesting case. The case, entitled Greta Reuter versus the Burlington County Board of Social Services, involves the notice requirement for a Medicaid denial.

Medicaid is a federal and state health insurance program for needy individuals. In order to qualify for Medicaid benefits, an individual must have a limited amount of assets. Unlike most policies of health insurance, Medicaid will pay for long-term care, such as care in a nursing home.

When an individual applies for Medicaid benefits, he files his application with the county board of social services for the county in which he resides. So, for instance, if Mr. Smith is living in a nursing home in Monmouth County, then Mr. Smith would file an application for Medicaid benefits with the Monmouth County Division of Social Services.

If your application for Medicaid benefits is denied, the county board of social services must provide you with a notice of the denial. The denial notice must inform you of the right to appeal the denial of benefits through a process called a “fair hearing.” An applicant who was denied benefits has twenty days from the date on the denial notice to file for a fair hearing.

I have probably filed over a thousand applications for Medicaid benefits. As one might expect for someone who has filed that many applications, I have received my fair share of denial notices.

Based upon my extensive experience, I can tell you that I often receive a denial notice that is dated many days if not a couple of weeks before I received the notice. County boards have mail rooms and their mailings are often delayed.

While I have never had a situation in which the State/County claimed that I failed to file an appeal of an adverse Medicaid decision in a timely manner, I have often thought about the issue. One thing that often crossed my mind was the question, How would the county and state prove that I received a denial notice since they do not send the denial notice by certified or registered mail?

The Reuter case answers this question. Essentially, Mrs. Reuter did not file her request for an appeal within the twenty-day time period. The county and state denied her request for an appeal, claiming that her request was untimely. Mrs. Reuter claimed that she never received the denial notice.

In the end, the court agreed with Mrs. Reuter, holding that the county and state could not prove that Mrs. Reuter ever received the denial notice. This case makes a great deal of sense.

As a lawyer, when I want to prove a party received a notice that I sent, I send the notice by regular and certified mailings or I have the notice personally delivered by a service processor. I cannot just say, “I sent it.” I have to prove that I sent the notice and the recipient received the notice.

While the county boards of social services probably do not want to spend money on certified mailings, the fact of the matter is, a denial notice implicates important due process rights. A Medicaid applicant who is adversely affected by the decision of the county board of social services must be provided with notice of the denial and his right to appeal the adverse decision.

If you are interested in learning more about New Jersey elder law, I have written a book on the subject entitled New Jersey Elder Law: A Resource and Planning Guide. ALM Media Properties, LLC, publishes my book. ALM is the publisher of the New Jersey Law Journal, New Jersey’s premier legal periodical. You can purchase my book by visiting http://www.lawjournalpress.com/player/eBook_310_New_Jersey_Elder_Law__A_Resource_and_Planning_Guide.html.

Big Change to Medicaid

Recently, the Division of Medical Assistance and Health Services (DMAHS), the division of the New Jersey government responsible for administering New Jersey’s Medicaid program, published informal rules implementing the biggest change to New Jersey’s Medicaid program to take place in the past twenty years. Medicaid is a health insurance program for needy individuals. Unlike private health insurance, Medicaid will pay for long-term care, such as care in a nursing home or assisted living residence.

In order to qualify for Medicaid benefits, a Medicaid beneficiary must have limited resources and income that is insufficient to pay for his care. For instance, if Mr. Smith were residing in a nursing home that cost $10,000 a month and his income were $3,000 a month, then his income would be insufficient to pay for his care.

Currently, New Jersey has two programs of Medicaid that will pay for long-term care in a nursing home, an assisted living residence, or at homeā€”one program is called Medically Needy Medicaid and the other is called Medicaid Only Medicaid. The Medically Needy program permits a Medicaid beneficiary to retain up to $4,000 in assets and does not have an income cap. The Medicaid Only program permits a Medicaid beneficiary to retain up to $2,000 in assets and has an income cap of $2,163, meaning that the beneficiary’s monthly income cannot exceed $2,163 in order for him to qualify for the program.

The Medically Needy program will only pay for care in a nursing home. The Medicaid Only program will pay for care in a nursing home, an assisted living residence, or at home. So, under the current Medicaid programs, if an individual is residing at home or in an assisted living residence and his income exceeds $2,163 per month, then he cannot qualify for Medicaid benefits.

The big change that is coming to New Jersey’s Medicaid program is the elimination of the Medically Needy program and the implementation of a single program that permits the use of a Qualified Income Trust (QIT) for income that exceeds the income cap. A QIT permits a Medicaid beneficiary whose income exceeds $2,163 per month to place his income in the trust and qualify for Medicaid benefits. This change offers Medicaid benefits to a whole new category of people in this state.

For instance, assume Mr. Smith is residing in an assisted living residence and his income is $3,000 a month ($1,500 from Social Security and $1,500 from a pension). Under the current programs of Medicaid, he could not qualify for Medicaid benefits because his income exceeds $2,163 per month and Medically Needy Medicaid does not pay for care in an assisted living residence; however, once the QIT is implemented, he will be able to qualify because his pension income ($1,500) could be placed in the QIT and would not be counted against him any longer.

Recently, DMAHS published informal rules regarding QITs and provided a template trust document. This information can be found at http://www.state.nj.us/humanservices/dmahs/clients/mtrusts.html. If your income exceeds $2,163 and you are looking to qualify for Medicaid benefits, I encourage you to visit this site.

If you are interested in learning more about New Jersey elder law, I have written a book on the subject entitled New Jersey Elder Law: A Resource and Planning Guide. ALM Media Properties, LLC, publishes my book. ALM is the publisher of the New Jersey Law Journal, New Jersey’s premier legal periodical. You can purchase my book by visiting http://www.lawjournalpress.com/player/eBook_310_New_Jersey_Elder_Law__A_Resource_and_Planning_Guide.html.

Does Medicaid Discriminate Against the Elderly

A recent decision of the Superior Court of New Jersey, Appellate Division, has a familiar ring to it for me. The case involves the Medicaid program and its transfer of asset rules.

Medicaid is a health insurance program for needy individuals. In order to qualify for Medicaid benefits, an individual must have a limited amount of assets, typically less than $2,000.

Because an applicant for Medicaid benefits must have very limited assets and because many applicants would simply try and artificially impoverish themselves by gifting their assets to family members, Medicaid punishes applicants who give away their assets. Medicaid looks at gifts that were made during the five-year period prior to applying for Medicaid benefits. This five-year period of time is called the lookback period.

If an individual gives away assets prior to the five-year lookback period, then Medicaid cannot punish the applicant for having given away those assets. If an individual gives assets away during the lookback period, then Medicaid can punish those transfers.

Medicaid punishes a transfer by making the applicant ineligible for Medicaid benefits for a specified period of time. The more assets an individual gives away during the lookback period, the longer the period of ineligibility.

The period of ineligibility that results from a gift made during the lookback period is called a penalty period. A penalty period is calculated by aggregating all transfers that the applicant made during the lookback period and dividing that aggregate figure by a divisor number.

The divisor number is the statewide average cost of a nursing home room. Currently, the divisor figure is $9,535.

So, for instance, if Mrs. Smith gifted $10,000, $20,000, and $10,000 to her son, then Medicaid would aggregate those gifts ($40,000). Medicaid will then divide that aggregate gift figure by $9,535, resulting in roughly four months of ineligibility for Medicaid benefits ($40,000/$9,535 = 4).

Medicaid can only punish gifts that were made in order to enable the applicant to qualify for Medicaid. If the applicant can prove that she made the gifts for a reason exclusively other than to qualify for Medicaid, then Medicaid cannot punish the gifts.

The rules governing Medicaid establish several factors that the Medicaid office should consider in determining whether or not a gift was made for a reason other than to qualify for Medicaid. For instance, if the Medicaid applicant had a sudden onset of an illness after the gift (a stroke, for instance), then the Medicaid office might believe that the applicant made the gift and did not anticipate needing long-term care at the time she made the gift.

In a recent case entitled S.L. v. Division of Medical Assistance, the applicant was a 96 year old woman. She made several gifts to her family, and the Medicaid office assessed a penalty period against her. The court upheld the assessment of that penalty despite the fact that all the evidence showed that S.L. did not make the gift to qualify for Medicaid, that she was living independently at the time she made the gifts, and that she suffered a stroke after she made the gifts.

I have found that when an applicant is elderly, as many applicants for Medicaid are, the Medicaid office will not accept the argument that the applicant had a sudden onset of a illness, essentially opining that an older person should have anticipated their illness. In my opinion, this is an incorrect assessment of the law.

The law focuses on the applicant’s mindset, did she make the transfer for reasons other than to qualify for Medicaid? If she did, then the inquiry should cease there. Someone who is 96 and living independently may honestly believe that she will never be in a nursing home. She shouldn’t be punished simply because she is old.