New Jersey Court rejects denial of Medicaid benefits where spouse refused to cooperate

When a married person applies for MLTSS Medicaid benefits, the applicant must provide 5 years of records pertaining to all financial activity of the applicant and their spouse. The applicant also must supply proof of the spouse’s current income and assets. Sometimes, the spouse just refuses to cooperate with the process, creating a dilemna for the Medicaid applicant. In some circumstances, the couple is actually estranges and not living together. Sometimes the spouse actually resides out of state – the couple is still married, but they live separate and apart. In other circumstances, it’s a second marriage and the children of the community spouse don’t wish to cooperate with the process. And sometimes, they live together and the spouse just refuses to produce the evidence. Whether willful or otherwise, the situation is referred to as having a spouse who refuses to cooperate, sometimes called “spousal refusal.” Unlike some other states, New Jersey did not adopt a specific regulation concerning what to do if the spouse refuses to cooperate. However, there is an explicit provision in federal Medicaid law that says that benefits cannot be denied if the applicant has assigned to the State all of the rights he has under state law to support by his spouse, or if denial of benefits would work “an undue hardship.”  In fact on a Medicaid application, the applicant has to sign just such an assignment of rights. The federal law is at 42 U.S.C. § 1396r-5(c)(3)(A)  and (c)(3)(C).

The federal statute says:  “42 USC 1396r-5(c)(3). Assignment of support rights. The institutionalized spouse shall not be ineligible by reason of resources determined under paragraph (2) to be available for the cost of care where—

(A) the institutionalized spouse has assigned to the State any rights to support from the community spouse;
(B) the institutionalized spouse lacks the ability to execute an assignment due to physical or mental impairment but the State has the right to bring a support proceeding against a community spouse without such assignment; or
(C) the State determines that denial of eligibility would work an undue hardship.

A recent case illustrates what can happen in a case where the spouse of the Medicaid applicant simply refuses to cooperate with the process due to disability or emotional distress. N.S. v. Div. of Med. Assistance & Health Servs., N.J. Super. App. Div. (per curiam). NS was 87 and had moved to a nursing home. His 86 year old wife was the community spouse. His daughter was his legal guardian, and she did not have a close relationship with her stepmother. Six written demands for information were sent to NS’s wife, which she didn’t answer, and in 2 personal visits she told NS’ guardian to just stop asking about all of that because “it was causing her stress.” He asked for the hardship waiver based on his wife’s refusal to cooperate.

In this case, the county board of social services refused to approve Medicaid without the records from the spouse, and refused to apply this federal requirement. Evidently the state’s “policy” was that at a minimum, the spouses had to be estranged from one another. A fair hearing took place, and substantial evidence was placed in the record concerning the efforts made to get information and the refusal by the community spouse . Nonetheless, the Administrative Law Judge sustained the county board’s denial, and the state Division of Medical Assistance and Health Services (DMAHS) issued a Final Agency Decision adopting that recommendation. However, the appellate division reversed, holding that that decision was arbitrary and capricious and disregarded the evidence in the case record. The decision was “not approved for publication,” which means it is instructive but is not precedential or binding on other courts.

P.S. There is some interesting discussion at the end of the case (see page 18-19) regarding demands for information that didn’t exist and that had been reasonably explained by N.S.’s guardian in correspondence to the caseworker. For more on THAT type of problem, see our post here.

Call us for representation on Medicaid eligibility planning, asset preservation, fair hearings and appeals ……… 732-382-6070

Medicaid Improvement Act signed by Governor Murphy

On July 12th we reported that a bill to improve and streamline the Medicaid application process was on the Governor’s desk. The bill was signed recently. Here’s the NJ Bar Association’s press release. Lauren Marinaro worked along with other colleagues in NJ NAELA to help get this bill passed.

This new law (S-499/A4569) is a good start towards evaluating and implementing procedures that can improve the experience that the public has when they need to apply for Medicaid benefits for long-term care. As regular readers of this blog know, applying for MLTSS is often a harrowing experience and applicants encounter many frustrating proof requirements that can be difficult if not impossible to meet.  The bill appoints a Medicaid eligibility ombudsperson to receive complaints, as well as liberalizes requests for more time to retrieve documents in the application process.

Look for more updates here on the Murphy administration’s implementation of this new law!

For advice on MLTSS Medicaid applications and appeals, call us at … 732-382-6070

New Social Security policy creates confusion over Special Needs Trusts

The Social Security Administration has published a new policy requirement concerning Special Needs Trusts in the form of a  provision in its POMS [Procedure and Operations Manual]. The new POMS states that attorney fees charged for preparation of certain trusts for individuals who are now receiving, or may in the future receive SSI, must be approved by the Social Security Administration (SSA). 

POMS Link: https://secure.ssa.gov/apps10/poms.nsf/lnx/0203920007

This new policy has created some confusion, because there are numerous situations in which an attorney drafts the Trust but is not representing the client in their application for SSI benefits at Social Security, and isn’t representing the client on any appeal of a denial or termination of SSI benefits.

When a person is disabled and needs benefits through Medicaid, SSI or other programs, there is a limit on the resources (assets) that they can have. If this person is under age 65, s/he may want to transfer the excess assets into a Special Needs Trust, because this is a way to preserve and safeguard the excess monies so they can be used for future special needs.

Sometimes the disabled individual hires a lawyer for estate planning and along with things like a Power of Attorney, Will and Health Care Directive, they sign a first-party Special Needs Trust. The lawyer prepares the estate plan and guides the client on how the plan is to be implemented. Other times, the disabled individual might be inheriting money from an estate — such as, their parent died and left them an inheritance — or might be settling a personal injury case or a workers compensation case. In all of these examples, the attorney may be preparing the Trust, but is not representing the individual on any of their claims or appeals before the Social Security Administration.

There are other situations as well when an SNT is prepared.

  1. SSI recipient has an SNT that is not valid and must be modified. SSI recipient [or his POA, or his Guardian] retains lawyer who does the legal work to amend or redo the trust, with or without court proceedings depending on the circumstances, along with basic instructions, and who then provides the signed documents to the claimant to personally deliver to the SSA.
  2. Estate planning for a family with a young child who has disabilities who may or may not apply for SSI benefits when he or she is 18.
  3. Estate planning for a disabled adult person who intends to apply for SSI; preparation of a Will, POA, LW, SNT, and opinion letter with guidance on how to fund the trust and what to do when client decides to go apply for SSI.
  4. Disabled person is incapacitated and Guardian is appointed, and Guardian gets court’s permission to establish and fund an SNT so that the Guardian can file a claim for SSI benefits [or update existing file, in case funds have been received]. Guardian hires a lawyer who does this work, but lawyer does not handle the case at the SSA.

The elder law bar is working   on this issue, as is the National Academy of Elder Law Attorneys , to obtain clarification from the Social Security Administration and determine how to structure these work relationships. In the meantime, practitioners need to be aware of the situation, as their clients may receive letters asking for production of  fee agreements and fee-approval applications. Along with concern about what the process will be for fee approval, how long it will take and the impact it might have on receipt of pending assets, another worry is that the POMS includes criminal penalties for attorneys who do not comply with the directive.

If you are concerned about this topic, contact Lauren S. Marinaro, Esq., immediate past President of the NJ chapter of NAELA.

Call us for legal advice concerning Trusts, Estates and Medicaid eligibility .. 732-382-6070

Marinaro secures Court reversal of Medicaid denial where the proof required by DMAHS just didn’t exist

The burden to prove eligibility for Medicaid rests with the applicant, but sometimes, the agency just refuses to accept the evidence they are given. This is demonstrated in a recent New Jersey case in which a denial of benefits was reversed by the Appellate court. The decision is “not approved for publication ,” which means it doesn’t establish a precedent that’s binding on other courts, but it does provide an interesting view of what can happen in a case. L.A. vs DMAHS decision

L.A and her husband established a revocable living trust for their own benefit, and transferred their house into it. Their Social Security numbers were associated with this trust. An attorney wrote the trust. The Asset Schedule  at the back of the Trust document wasn’t filled out, so nothing was shown as to the assets that were placed into the trust. Some years later, in 2012, the trustees transferred the property out of the trust into the names of L.A. and her husband. In 2017, the couple terminated the Trust — which held no assets and apparently no longer had any purpose —  and transferred the house into L.A.’s sole name. Later, a Medicaid application was filed for L.A. They didn’t disclose the Trust when they provided the 60-month look-back documents. For the look-back, one must submit records of all assets held within the prior 60 months. As noted, the Trust had not held any assets during the look-back period. The agency reviewed the Deed and asked for the Trust records. The applicant submitted the trust document, the trust termination document, and a letter from their attorney which stated that the only asset that was ever in the Trust was the house. As noted above, Schedule A to the trust was blank, so no assets were listed on the Trust. The application was denied for “failure to submit required verifications” of the assets in the trust. L.A. requested a fair hearing appeal before the Office of Administrative Law (OAL).

At the hearing before the Administrative Law Judge (ALJ), the attorney who wrote the trust testified in accordance with the letter he had written for the application, and explained that the annexed Schedule was left blank because it called for information not applicable to the situation. Both he and L.A.’s husband testified that the house was the only asset that was ever in the Trust. Tax return evidence was submitted which did not show income from any trust assets.  The ALJ concluded that they were credible, but that the explanation about the blank schedules was inadequate and that plaintiff had indeed failed to submit the “required verifications” to establish Medicaid eligibility, and upheld the denial of benefits. The DMAHS adopted that decision, and L.A. appealed, represented by our Firm. Essentially, the Final Agency Decision stood for the proposition that even when there is no proof of assets, the agency may presume that they exist, and may deny eligibility for failure to prove otherwise.

On appeal, the court reversed, ruling that the final agency decision was not supported by the record. An administrative agency must base its decision on the “substantial credible evidence” in the case record, and the appellate court can overrule an agency decision if it is based on “findings that are contrary to the record.”  The court noted that the agency “reviewed the application with skepticism” despite the explanations,  and despite that information, “speculated” that additional assets were in the trust, leading to a situation in which “L.A. was required to produce information that simply did not exist” The Court reversed the denial, and held that “L.A. supplied all the necessary information for review of her application, and that her benefits should not have been denied because of the omission” of evidence that simply does not exist.

The Medicaid application process is a minefield with many traps for the unwary. As individuals grow older they need to always be looking to the future when they set up their financial arrangements, maintain their paperwork and handle their accounts and trusts, because things can turn on a dime and it just might become necessary to prove one’s eligibility for Medicaid. We’re here to help at every step of the way.

 

Call for advice and representation concerning Medicaid planning, applications and appeals ……. 732-382-6070

Estate Recovery Bill Limits Medicaid Services That Can Be Recovered

New Jersey expanded Medicaid under the Affordable Care Act, (ACA, also called Obamacare) causing terrific health coverage gains for its residents.  One unfortunate byproduct of Medicaid expansion is Estate Recovery, which can be assessed against any Medicaid recipient over the age of 55.  The purpose of estate recovery is to reimburse the State for Medicaid benefits provided, and typically the recovery is against assets that were excluded from consideration during the beneficiary’s lifetime (such as a residence)

For MLTSS recipients, the recovery is limited to nursing home or home and community-based services (HCBS) and ancillary services, but for ACA Medicaid recipients, all services, including hospital and doctor coverage, could be recoverable. The lien is placed against the assets in the estate of the deceased Medicaid recipient. The Executor of the Estate would need to pay back the lien from estate assets before distributing the remainder to the heirs of the deceased person. This can create an encumbrance against real property, for example.

Sen. Cryan has proposed a bill to conform ACA Medicaid Estate Recovery to MLTSS Estate Recovery.  This is a welcome revision.  People age 55 or older looking for coverage won’t have to think twice about being Medicaid eligible and using Medicaid for their basic healthcare needs.  The New Jersey Chapter of the National Academy of Elder Law a Attorneys (NAELA) wrote in support of this bill and we look forward to its passage.

If this legislation is of interest to you, contact your legislators.

For legal advice concerning estate administration and problems with Medicaid liens, call us at 732-382-6070