In Medicaid planning we must often take the good with the bad.  So, let’s start with the…not so good:

The Supreme Court of Mississippi in Alford v. Division of Medicaid affirmed the lower court’s ruling that a state court has no jurisdiction to increase the Community Spouse Resource Allowance (CSRA) or Minimum Monthly Maintenance Needs Allowance (MMMNA) prior to a petitioner filing for Medicaid.  The Court interpreted 42 USC § 1396r-5 as requiring a Medicaid application to be filed, denied, and a fair hearing conducted before a Medicaid applicant can seek help in state court.

Previously, and in other states, a future Medicaid applicant or his/her spouse could file a petition in state court asking for an allowance above what would otherwise be allowed as the CSRA or MMMNA.  The Medicaid agency would then be bound by that court’s order.  Unfortunately this is no longer an option in Mississippi, at least for the time being.
Unfortunately, the good news earlier reported was in error.   The Superior Court of New Jersey Appellate Division in E.S. v. Division of Medicaid Assistance and Health Services upheld a penalty imposed under a personal service contract (called a “life care contract” in the case) between the petitioner and her daughter, in which petitioner made a lump sum advance payment to her daughter for the future provision of personal care services.  The mother was penalized for the transfer.

Personal service contracts are often used to provide a payment, either in a lump sum or hourly, to a family member who is providing care to an elderly loved one.  If properly documented, the money paid to the family member/caregiver is not penalized as an uncompensated transfer for Medicaid purposes.  Unfortunately, many states have forbidden the use of “lump sum” caregiver contracts when the family member is providing care, or if the recipient of the care is already in a nursing home.

Valerie L. Peterson

Valerie is the Executive Director of ElderCounsel, LLC , an organization that provides document drafting software, education and support to elder law and special needs attorneys across the United States.