How to Challenge a Medicaid Denial for Gifts Made Within Five Years

By Fredrick P. Niemann, Esq. of Hanlon Niemann, a Freehold, NJ Appealing Denial of Medicaid Attorney

With each passing day, more and more citizens apply for Medicaid benefits when they can no longer pay for or provide necessary services for themselves.

At its very core, there are two main hurdles for Medicaid applicants in New Jersey to overcome: the $2,163.00/month income limit for Global Options (soon to be abolished on or about October 1, 2014) and the $2,000.00 asset limit. While seemingly straightforward, each limit is stringently monitored to ensure that Medicaid benefits are awarded to those eligible applicants and not to applicants who transfer and gift away their finances with the intention of qualifying for Medicaid. Great scrutiny is placed on compliance with the asset limit since it is much easier for individuals to adjust. It is in this way that the government applies a sixty (60) month “look-back” period to determine if a Medicaid applicant is truly eligible or attempting to avoid a period of ineligibility. Any transfers made for less than fair market value within this sixty (60) month look-back period will result in a period of ineligibility (called a “penalty period”) for a duration determined based on the amount transferred and the average monthly cost of nursing home care within New Jersey.

But what about unique and truly extenuating circumstances? For instance, what is to happen to an individual healthily enjoying the later years of their life when suddenly disaster hits? Individuals caught in such a situation have no opportunity to plan ahead for times of need and may face lengthy periods of ineligibility for gifts given to family members without any intention of circumventing the Medicaid resource limits. Fortunately, New Jersey permits asset transfers made within the 5 year look-back period when the gifts were not intended to unlawfully circumvent the Medicaid resource cap, for eligibility purposes.

The specific statute on this matter is N.J.A.C. 10:71-4.10(e)(6)(ii), which states that “[t]he application of a transfer penalty as set forth in this section shall not apply when: A satisfactory showing is made, to the State that: The assets were transferred exclusively for a purpose other than to qualify for medical assistance.” Thus, upon proof that any transfers made by a Medicaid applicant, including any gifts or payments to family members, were made prior to any contemplation of Medicaid eligibility whatsoever, then it should follow that no transfer penalty shall apply.

According to N.J.A.C. 10:71-4.10(j), “[a]ny applicant or beneficiary may rebut the presumption that assets were transferred to establish Medicaid eligibility by presenting convincing evidence that the assets were transferred exclusively (that is, solely) for some other purpose.” As previously mentioned, a Medicaid applicant retains the ability to contest the assumption that any transfers made within the sixty (60) month look-back period were done with any intent to qualify for Medicaid eligibility. In order for the applicant to meet their burden, they must successfully prove that the rationale behind any transfer was purely for purposes of which do not include circumventing the Medicaid resource cap. See Id.

In order for an applicant to support a claim that transfers made within the look-back period were for reasons other than becoming Medicaid eligible, the applicant will be required to produce evidence explaining the nature of the transfer, any documents relating to the transfer, and statements from any individuals with information relating to the transfer. The burden of proof is on the applicant to show that the transfer was executed without for reasons of which do not include establishing Medicaid eligibility.

In E.S. v. Division of Medical Assistance Health Services, 412 N.J. Super. 340 (2010), the court examined the appropriateness of a transfer penalty imposed by DMAHS on a Medicaid applicant where the transfer in question was premeditated payment on a life care contract (“LCC”) from the applicant to her daughter. DMAHS concluded that the payment of $56,550 to the applicant’s daughter in lieu of services to be rendered in accordance with the LCC was a transfer of assets for less than fair market value during the look-back period intended to permit the applicant to qualify for Medicaid. In E.S., it seems as though the court placed a heavy burden on overcoming the agency’s presumption that the transfer involved an intent to become Medicaid eligible.

In order to permit an applicant to launch a successful appeal to any denial of Medicaid benefits stemming from his or her alleged transfers, he or she will need to make a strong case that any transfers conducted before their circumstances or deteriorating health required financial assistance were for reasons other than Medicaid compliance. The argument to be made is as follows: an applicant made gifts or transfers for less than fair market value while he or she was in good physical health and at a time when he or she was in no way contemplating an application for Medicaid. Unfortunate circumstances have lead to the applicant’s rapid demise in health and have since necessitated Medicaid assistance to ensure his or her future wellbeing. Therefore, in order to substantiate such claims the applicant will likely need to produce any copies of checks or transfers made out to their recipients, health records from both the time in which the transfers were made and after the applicant’s circumstances necessitated Medicaid assistance, and statements from both the applicant and anyone who received a transfer from him or her.

Though the burden is high, upon a sufficient showing that any transfers made in good health were devoid of the intent to qualify for Medicaid assistance, an applicant can avoid a penalty period of ineligibility.

To discuss your NJ Appealing Medicaid denial matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at Please ask us about our video conferencing consultations if you are unable to come to our office.