Gifts made for purposes other than to qualify for Medicaid are not punished, even within the five year “look-back period.” Oftentimes, unfortunately, the Medicaid application will initially be denied by the Department of Social Services (“DSS”), but at a Fair Hearing, with sufficient proof and good facts, penalizing gifts can be explained away.
EXAMPLE: Sam and Susan live in Smithtown, NY and have one son, Nate, and one granddaughter, Nicole. Nate and Nicole live in neighboring Nesconset. On August 8, 2015, an application for Medicaid was made on behalf of Sam; he was admitted into a skilled nursing facility on January 18, 2015 and continued to reside there until he died on December 9, 2015. Sam and Susan gave $10,000.00 to their granddaughter Nicole on August 2, 2014. DSS determined this gift to be an uncompensated transfer and imposed a penalty period.
A fair hearing was held where Susan testified that she is a Registered Nurse and that Sam was diagnosed with early Alzheimer’s in 2013. She acknowledged that they made of gift of $10,000.00 to their only grandchild, Nicole (age 18), on August 2, 2014. Susan noted that she and Sam have been giving Nicole gifts three to four times a year since her birth. She contended that Sam was in good shape in August, 2014, participated in the gift, used a computer, and was playing golf at the time of the gift. She maintained that Alzheimer’s is a long term disease with a progression that could last five to ten years. Susan explained that she felt that she could care for Sam at home and she did not intend to place him in a nursing home. Susan indicated that she was not even aware of Medicaid in August, 2014. She explained that Sam’s medical condition deteriorated rapidly in January, 2015 and he became incontinent of bladder and bowel. She stated that she had her own health problems and could not take care of Sam in their home. She contended that they did not make the gift to her granddaughter with the intent to qualify for Medicaid.
Susan explained that her granddaughter is currently in high school and will be going to college in the fall of 2016. She stated that the $10,000.00 was to pay for books, application fees, and tuition. She then testified that they had previously given their granddaughter money for birthdays and for good grades in amounts such as $200.00 and $500.00. She stated that they bought their granddaughter a computer in the year 2007.
Susan also indicated that she and Sam have consistently given their granddaughter gifts of clothing, money, and jewelry including: $3,000.00 at the Nicole’s Christening; a computer worth $2,500.00 to $3,000.00 when she entered grade school; a pearl necklace which was started at birth and was completed on December 20, 2005 with an appraised value of $1,400.00; a birthstone ring and gold earrings worth a total of $414.00 on Nicole’s 16th birthday; a $100.00 savings bond yearly since birth along with an annual check for $100.00 to $200.00; and a check for $200.00 plus a small piece of jewelry every Christmas.
Nate also testified consistently with the testimony of Susan. He testified that he used a portion of the $10,000.00 gift to pay for ACT tests, deposits to colleges, and for traveling expenses to visit several campuses.
The DSS acknowledged the long history of gifts, but maintained, that none of the gifts were near the magnitude of the $10,000.00 given in August, 2014.
Decision of the Administrative Law Judge: Medicaid must be approved without a penalty.
The Judge found Sam and Susan had been giving their only granddaughter gifts regularly since her birth and while these gifts were not as large as the $10,000.00 gift, they were substantial in size. The Judge believed that Sam was in reasonably good health at the time the gift was made on and that there were no plans for him to enter into a skilled nursing facility at that time. The Judge found that the $10,000.00 given to the Appellant’s granddaughter was transferred exclusively for a purpose other than to qualify for Medicaid; consequently, the DSS’s determination must be reversed and Medicaid approved for Sam.i
Lesson: consistent gifting throughout the years and gifting while healthy are important components to proving that gifts should not punish a Medicaid applicant; i.e., the gifts were made for purposes other than to qualify for Medicaid.
To be continued ….
Aaron E. Futterman, CPA, Esq. is a partner in the law firm of Futterman & Lanza, LLP with offices in Smithtown, NY and clients throughout Suffolk, Nassau, Queens, Brooklyn, Bronx, Richmond, New York, Westchester and Rockland Counties. He concentrates his practice to Elder Law, Medicaid Planning, Medicaid Applications, Estate Planning, Probate, Estate Taxes, and Estate Administration.
i See Albany Fair Hearing dated October 18, 2007, FH # 4898029L.