Medicaid Applicant’s Start Date Should Have Been Earlier, but Penalty for Gifts During Lookback Period Was Appropriate

A New Jersey administrative division finds that a married couple applying for Medicaid made an annuity irrevocable and could therefore qualify for Medicaid on an earlier date. However, it also determines that the applicant and her spouse failed to rebut the presumption that gifts made in the five-year lookback period were exclusively for a purpose other than qualifying for Medicaid. In A.V. v. Division of Medical Assistance and Health Services and Cumberland County Board of Social Services (OAL Dkt No. HMA 08575-2021, August 19, 2022).

In January 2021, A.V., who has Alzheimer’s and dementia, moved into a skilled nursing facility. That April, she applied for Medicaid, seeking a community spouse resource allowance for her husband, J.V.

When the Cumberland County Board of Social Services (CCBSS) suggested the couple spend down their assets, J.V., purchased an annuity. The annuity was recoverable for 30 days after the transaction, but J.V. waived his right to revoke it with an Immediate Irrevocable Election Form (IIEF). During the five-year lookback period, the spouses had made gifts to children and grandchildren exceeding $20,000, which J.V. asserted were for wedding gifts and help to purchase vehicles.

Finding that the annuity was revocable for the first 30 days, the CCBSS granted A.V.’s Medicaid application with a 30-day postponement, setting the eligibility date to July 1, 2021. It also imposed a 67-day penalty due to the gifts the couple made during the lookback period.

On an initial review of the CCBSS decision, an administrative law judge found that the effective date should have been one month prior, as J.V. had signed away his right to revoke the annuity. The administrative law judge also found that A.V. rebutted the presumption that she and her spouse gave away assets to qualify for Medicaid, reversing the 67-day penalty.

On the second review, the administrative court finds that the effective date should have been earlier — June 1 rather than July 1 — because the annuity was irrevocable. When J.V. signed the IIEF, he waived his right to get the money back, rendering the transfer irreversible. The terms of the IIEF and the bank’s acceptance show that the annuity was irrevocable, removing the 30-day cancellation period.

The agency reverses the administrative law judge’s recommended decision relating to the gifts. A.V. failed to rebut the presumption that a reason for the gifts made during the lookback period was Medicaid eligibility. Although the gifts had purposes — as wedding gifts and as help for grandchildren in purchasing cars — A.V. did not show that these objectives were exclusive. Since A.V. had Alzheimer’s for the past six years and her husband pointed out the challenges of her care, Medicaid eligibility was likely a motivating factor behind the gifts.

Read the final agency decision in full.

Editor’s Note: Special thanks to ELA member Krause Financial Services for sharing this final agency decision.