A recent case highlights the fault in an old argument about how much help the State must provide to an applicant for Medicaid benefits.  Medicaid is a health payment plan for needy individuals.  If a person qualifies for Medicaid benefits, the Medicaid program will pay for most of an individual’s necessary medical care.

In order to qualify for Medicaid, an individual must have very limited assets.  Typically, the individual must have less than $2,000 in assets.

Medicaid is a state and federal government program.  Both the federal government and the state government share in the costs associated with the program.  The New Jersey Department of Human Services is responsible for administering the program, but the State contracts out the work of processing Medicaid applications to the various counties.  In each county, the county board of social services processes applications for Medicaid benefits.

There are several different programs of Medicaid.  I help my clients qualify for institutional level Medicaid benefits, benefits that will pay for care in a nursing home or assisted living residence.  The program of Medicaid for which I help my clients qualify has a five-year lookback feature.

Medicaid looks at the period of time five years prior to the date of application to see if the applicant has made any uncompensated transfers.  This is the lookback period.  In order to examine the activity during this period of time, the County asks for financial statements for every account the applicant owned in the past five years. The information concerning the applicant’s finances are laid bare to the County to review and scrutinize.  The examination of the financial statements has primarily one question—did this applicant make any uncompensated asset transfers during the past five years?

If the applicant did make any uncompensated asset transfers, then he will be rendered ineligible for Medicaid benefits for a length of time.  The more assets the individual gave away during the lookback period, the longer the period of ineligibility for Medicaid benefits.

While the lookback period is all about the five years prior to the date of application for benefits, the penalty period that results from any uncompensated asset transfers can be unlimited in duration.

If the applicant is ineligible for Medicaid benefits, then the Medicaid program will not pay for his care during the lookback period.  So, from a practical viewpoint, Medicaid will not pay for the nursing home, and since the individual has less than $2,000 in assets in his name, he cannot pay the nursing home privately.  Since the nursing home is not getting paid, the nursing home could discharge the individual for non-payment.

Applying for Medicaid is an intensive process.  I have applied for Medicaid benefits for hundreds of individuals, and I can tell you without hesitation that conducting a five-year forensic accounting on any person’s financial activities, no matter how simple they think their life has been, is intensive and can cause questions.

When an applicant fails to comply with a request from the County for information, the County will inevitably deny the application for benefits for lack of cooperation.  There is a provision of the Medicaid law that says the County must assist the applicant in obtaining financial information.  From time-to-time, an applicant will argue that the County should have helped them get their financial information and shouldn’t have denied the applicant for lack of cooperation.

In the recent case, for probably the second or third time that I have seen, the court has said the County’s obligation to assist is very limited and the denial of the application for lack of cooperation was justified.  The lesson to be learned is, take the application process seriously and take requests from the County seriously.