Non-Transferable Loan Is a Transfer of Assets for Less than Market Value

A Louisiana appeals court finds that for the purposes of Medicaid eligibility, a non-transferable, non-negotiable loan with no cash surrender value is a transfer of assets for less than market value. Cox v. Secretary, La. Dept. of Health (La. Ct. App., 2nd Cir., No. 41,391-CA, August 25, 2006).

Before his wife, Ruby, entered a nursing home, Virgil Cox loaned his son $68,000. The loan instrument was non-transferable, non-negotiable, and had no cash surrender value. The state denied Mrs. Cox's subsequent application for Medicaid long-term care benefits, stating that because the loan was for less than market value, it was an illegal transfer of assets.

The trial court reversed, holding that Mrs. Cox was eligible for long-term care benefits, and the state appealed.

The Court of Appeals of Louisiana reverses, holding that the loan was a transfer of an available resource for less than market value. The court states that "the alleged loan eliminated Mr. Cox's ownership of $68,000 in exchange for a non-negotiable note with no cash surrender value, and no transferability, backed by only an unsecured promise."

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