A recent decision of the Superior Court of New Jersey, Appellate Division, highlights an interesting issue affecting New Jersey’s Medicaid program. This new decision and the fact that several of my colleagues are suing the state of New Jersey over this issue makes it something worth bringing to the public’s attention.
Medicaid is a health payment plan for needy individuals. In order to qualify for Medicaid, an individual must have a very limited amount of assets, typically less than $2,000 in countable assets.
Because a Medicaid applicant must have very limited assets in order to qualify for benefits, many applicants think they can simply give their assets away and qualify for benefits. For this reason, Medicaid has rules concerning the transfer of assets.
If an applicant gave away any asset within five years of applying for Medicaid benefits, Medicaid punishes the applicant. This five-year period of time is commonly known as the lookback period.
The manner in which Medicaid punishes the applicant is by making him ineligible for Medicaid benefits for a period of time. This period of time is known as a penalty period; a penalty period is a period of ineligibility for Medicaid benefits.
The more valuable the asset that was given away, the longer the period of ineligibility for Medicaid. Medicaid will aggregate the value of all assets that an applicant gave away during the lookback period to calculate the penalty period.
After Medicaid has a total value of assets given away during the lookback period, Medicaid divides that total figure by a divisor number in order to calculate the penalty period. The divisor number that Medicaid uses is based upon the statewide average cost of a nursing home room. The current divisor figure that Medicaid uses is approximately $10,000.
For every $10,000 that an applicant gives away during the lookback period, he will be ineligible for Medicaid benefits for one month. This is the penalty period. If Mr. Smith gave away $60,000 during the five-year period prior to applying for Medicaid benefits, he will be ineligible for Medicaid benefits for six months.
There are certain exceptions to the transfer of asset rules. One exception has to do with a transfer of the house of the applicant.
If an applicant transfers his house to his child who lived with him for a period of two years prior to the applicant entering a nursing home and if the child provided a level of care to the parent that enabled the parent to live at home instead of in a nursing home during that two-year period of time, then Medicaid cannot impose a penalty period against the applicant for his giving his home to his child. This is called the caregiver child exception.
Recently, New Jersey has imposed an arbitrary and unwritten rule prohibiting a caregiver child from working during the two-year period. If the child worked during the two-year period of time, then Medicaid will claim that the child is not a caregiver child.
In the recent appellate division case, the court held that the applicant had failed to prove by sufficient evidence that his child had provided the requisite level of care during the entire two-year period of time. Interestingly, the child worked and the court did not find this fact to be a per se bar to the child’s caregiver status.
While I believe that work can be a factor in whether or not a child is a caregiver child, it cannot be a per se bar to caregiver child status. Oftentimes, disabled elderly people need a lot of care at night. They need help getting to the bathroom at night. The might wander at night. They might need medications at night. Providing care is a 24/7 job and no one person can be expected to provide all of that care.