No Penalty Period for Medicaid Recipient’s Transfer to Pooled Special Needs Trust

A Minnesota appeals court holds that a penalty period is not appropriate for a Medicaid recipient who transferred funds into a pooled special needs trust because the recipient showed valuable consideration for the transfer by providing evidence of the goods and services he intended to receive from the trust. Pfoser v. Harpstead (Minn. Ct. App., No. 19HA-CV-18-3466, Jan. 13, 2020).

David Pfoser, who suffered from Parkinson’s disease, moved into a nursing home after an injury and began receiving Medicaid benefits. When it became clear Mr. Pfoser would not return home, his guardian sold the house and transferred the proceeds to a pooled special needs trust. Based on the transfer, the Medicaid agency imposed a penalty period.

Mr. Pfoser appealed the penalty, arguing that he would use his trust sub-account to pay for goods and services, such as an adaptive recliner and equipment for his wheelchair, which are not covered by Medicaid. The Medicaid agency found that Mr. Pfoser did not receive adequate compensation when he made the transfer and affirmed the penalty period. Mr. Pfoser appealed to court, which reversed the agency’s decision. The agency appealed.

The Minnesota Court of Appeals affirms, holding that when determining whether a Medicaid recipient “intended to receive fair market value or other valuable consideration in exchange for his transfer of assets to a pooled special-needs trust, the commissioner must consider evidence of valuable consideration received by the recipient before, during, and after transferring assets to the pooled trust.” According to the court, Mr. Pfoser showed valuable consideration by providing “evidence of goods and services he intended to receive after transferring his funds into the [trust] and showed his sub-account would be depleted within two years by paying for goods and services that [Medicaid] would not cover.”

For the full text of this decision, go to: http://www.mncourts.gov/mncourtsgov/media/Appellate/Court%20of%20Appeals/Standard%20opinions/OPa190853-011320.pdf

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