Estate Recovery and Medicaid Liens

“If I go into a nursing home, will the State take my house?” This is a commonly-asked question. The answer is “No, but …” If a person applies for long-term care Medicaid benefits, his available assets have to be below a certain level. The house he owns generally has to be listed for sale (called a “Plan of Liquidation”), but this requirement is waived (or deferred) if there is an immediate family member residing there, such as a spouse or child or sibling. In New Jersey, the State does not place a lien against the property during the Medicaid recipient’s lifetime. Some other States do so; these are referred to as “TEFRA Liens.”  (Social Security Act 42 USC § 1917(a)(1)-(2)). So, if the property is on the market and then is sold, the individual would then lose eligibility for Medicaid benefits until the proceeds of sale have been “spent down.” If the individual dies and still owns the house, the house will be in his/her estate, and federal law requires States to seek recovery from the Estate of the deceased Medicaid beneficiary, for the value of correctly-paid Medicaid services provided after age 55.

Under some circumstances, the State must defer recovery until a later date. The 2016 CMS Coordination of Benefits Handbook in Chapter III.B. provides a succinct explanation of estate recovery starting at page 53.

Under federal law, the State Medicaid Agency  (SMA) may only make recoveries from the beneficiary’s estate under the following circumstances:  (a) After the death of the surviving spouse (regardless of where the spouse lives);  (b) When the deceased beneficiary’s children have all reached age 21; (c) after the death of a child of the beneficiary who is blind or disabled, regardless of where the child lives. The State cannot even record a lien against the property while there is still a surviving spouse, child under 21 or blind or disabled child.  In addition, New Jersey has a policy that if another family member was residing in the premises at the time of the death of the institutionalized Medicaid recipient, and continues to reside there, the State will record its lien but will not enforce it until the person moves out or the property is sold. See attached: The_NJ_Medicaid_Program_and_Estate_Recovery_What_You_Should_Know

Very often, transferring ownership of real estate is an important component of nursing home care planning, but there are also circumstances where it just cannot be done, or is not done, before the Medicaid recipient dies. The estate administrator or executor then needs to be aware of the ramifications of the Medicaid lien against the estate’s assets so that the estate administration can be correctly managed.

Call us about Medicaid eligibility planning and estate administration ….. 732-382-6070

Homemade Powers of Attorney can create expensive legal problems

I ran into a situation recently that I thought I’d share with my readers since it’s the type of thing that happens over and over again. The Elder person is living in New Jersey but owns real estate in another state that needs to be listed or sold because he is applying for Medicaid to pay for his nursing home. The person has Alzheimers Disease and no longer has capacity to sign legal documents. The person who takes care of everything for him up here in New Jersey holds a power of attorney that they made using an “internet form.” It is titled “General Durable Power of Attorney Effective Upon Execution,” and was signed by the elder a few years ago in front of witnesses and a notary.

It sounds like this document gave authority to the agent right away, right? The problem is that the very first paragraph then says ” I ____ designate ____ to act for me, if I should become disabled or legally incapacitated. This document shall become effective upon the date of my disability or legal incapacity and shall not otherwise be affected by my disability or incapacity.” The first sentence creates a Springing Power of Attorney. The second sentence is a mixture of language from Durable Power of Attorney and Springing Power of Attorney, an obvious conflict.

The named agent found that they had to produce current doctors’ opinion reports attesting to the elder’s incapacity. The agent has lost weeks and weeks of time gathering this evidence and submitting it to insurance companies, banks etc. for legal review.

And there is another problem: in the state where the property is located,  springing powers of attorney are not valid. The agent learned this when they hired the real estate attorney there. So in order to sell the property, it will probably be necessary to file a guardianship action. And generally speaking, you can’t initiate a guardianship action in one state if the individual is permanently residing in another state …. you initiate it where the individual resides and then have to go through a separate set of proceedings in the other state. Needless to say this has all created a complicated and potentially expensive legal tangle that involves two states and two lawyers and substantial delay.

As I like to say, careful planning [with legal advice] can prevent a crisis.

Call us for advice on estate planning and long-term care planning … 732-382-6070.

Reduction of Home Care Hours Under Medicaid Can’t be Arbitrary

New Jersey Family Care is the Medicaid a program that provides MLTSS — Medicaid Long-Term Services and Supports. The home care program is called HCBS — Home and Community-Based Services. Once the applicant has been found eligible for Medicaid and is assigned a Medicaid case number, s/he must select a Managed Care Organization (MCO). S/he will then receive a visit from a Case Manager from the MCO, who will determine the number of hours of services which will be provided. See prior posts for more discussion about that process. This initial determination is appealable.

The case will then be reviewed periodically. Reviews are usually done done every six months, using a MCO tool that conforms with state Medicaid guidelines. The MCO has a vested interest in keeping the hours of service as low as possible, which creates a conflict with the aged person who wishes to age in place in the community, but this is balanced with the MCO’s obligation to reduce risk and prevent institutionalization. Hours cannot be arbitrarily reduced. The MCO must be able to document that there has been a change in the Medicaid participant’s condition which justifies the reduction of services, unless hours were awarded prior to MLTSS by another MCO.  Here, here and here are three good  recent examples of Final Agency Decisions in cases that involved reductions in hours.

The goal is to keep people at home and out of nursing homes.As the advocate for the Medicaid participant, you can monitor the services provided as well as the capability of the individual and whether there has been any improvement in their health condition or their ability to take care of him/herself. This will provide you with some of the ammunition needed should you be faced with a notice of reduction in hours.


Call us for advice on Medicaid eligibility, applications and appeals … 732-382-6070

Payback provisions are required for a qualified special needs trust

Self-settled special needs trusts must have a payback provision to be considered an exempt trust  under the federal and state Medicaid program. A Medicaid applicant under 65 can transfer his or her excess resources (assets) into a “special needs trust” and avoid the usual transfer penalties, but only if the trust meets all of the requirements of the federal and state law. Also, if the trust meets all of the requirements it will not be treated as a countable resource that might otherwise disqualify the person. New Jersey’s regulations are quite detailed on this subject. One of these requirements is that the State of New Jersey must be named as the first beneficiary upon the death of the trust beneficiary/Medicaid recipient, up to the amount the State has expended for the individual. The case of D.W. v.Division of Medical Assistance and Health Services,

2015 WL 7738711 (App. Div. 2015), illustrates the problem.

D.W. received a settlement from a personal injury action, and a first party trust was established for D.W.’s benefit by the Court to receive the assets. However, the Trust lacked the required payback provision. D.W. lost his benefits/ was turned down for benefits because the amount in the trust was deemed to be a countable resource and put D.W. over the resource limit for the Medicaid program. On appeal, the Appellate Division affirmed, in an unpublished and nonprecedential opinion.

This was an unfortunate situation.  D.W. may be able to initiate an action in court to reform (amend) the Trust moving forwards, but that will not guarantee that the amendment will be made retroactive.

For legal advice and representation on Special Needs Trusts and Medicaid application, call us at … 732-382-6070

Medicaid Eligibility – What if the Services aren’t delivered?

After a Medicaid long-term care application is approved and the Plan of Care (PoC) for  home and community-based services is approved (MLTSS-HCBS), the individual may be faced with a wait. The New Jersey Medicaid HMO’s that provide the services for the State of New Jersey are required by the State contract to have a deep enough provider pool to service the need. However, clients are reporting that they are being told to “just wait until we can find someone who can service your area.” This is obviously unacceptable, and the question is, what remedies are available.

Disability Rights New Jersey is a nonprofit organization that has attorneys who are tackling these issues now. Lawsuits may be the only remedy, and there may be procedural football between the HMO and the State Department of Health and Human Services/ Division of Medical Assistance and Health Services (DMAHS). Who exactly bears the responsibility when promised services are not delivered to approved, eligible individuals? Section VIII, Paragraph 53 of the Special Terms and Conditions in the federally-approved Comprehensive Medicaid Waiver says that ” A “Plan of Care” is a written plan designed to provide the demonstration enrollee with appropriate services and supports in accordance with his or her individual needs. All individuals receiving HCBS or MLTSS under the demonstration must be provided services in accordance with their plan.” (emphasis added)

One approach could be that  failure to provide services would be appealed through the administrative “fair hearing” process at the NJ Office of Administrative Law.  The other approach could be that a mandamus action has to be filed in state or federal court.

The individual should be entitled to a Notice of Inadequacy when the HMO claims it has an inadequate provider pool. After a time, the applicant should call the HMO if services are not forthcoming. If the HMO reports network inadequacy as the reason, then the approved individual can (1) contact the Office of Quality Management and request to be placed into a different HMO or (2) can select a Person-Employed Provider option which would enable them to select their own aide but will add additional obligations on them as a household employer, state plan mn hcbs, or (3) wait some more, or (4) go to a nursing home or (5) borrow money from a friend or family member to hire private care, or (6) consider legal options.

The open question is whether a failure to provide services to an approved Medicaid applicant gives rise to a cause of action through the civil courts to compel the provision of services. Another open question is whether the failure to provide approved services is an adverse action by a government agency that gives rise to a right to an administrative fair hearing under the state’s Administrative Procedure Act (APA). In any event, a person who has been approved for Medicaid Home and Community-based Services who isn’t receiving services in a timely way should consult with elder law counsel to map out their options.

Call us for representation on regarding New Jersey Medicaid applications and appeals … 732-382-6070