It is a black-letter rule that all non-exempt transfers of assets for less than fair-market value that are made within five years of applying for Nursing Home Medicaid coverage will result in the imposition of a Medicaid "penalty period." One exception to the transfer penalty rules are transfers made "for a purpose other than to qualify for Medicaid. When other exempt transfers (such as transferring assets to a spouse) are not available, this "catch all" exception is frequently argued by Medicaid applicants seeking to avoid the imposition of a Medicaid penalty period.
Such an argument was made in Corcoran v. Shah, which was recently before the New York Supreme Court's Appellate Division for the 4th Judicial Department. In Corcoran, a Beatrice Corcoran and her husband had transferred $176,000 to family members. Within five years of those transfers Mrs. Corcoran applied for nursing home Medicaid coverage, and the state imposed an 18-month Medicaid penalty period.
In challenging the state's determination, Mrs. Corcoran argued that the transfers were not in fact made for the purpose of qualifying for Medicaid and thus fell under that exception to the Medicaid penalty rules. In its June 20th, 2014 decision rejecting Mrs. Corcoran's argument, the Court noted that Mrs. Corcoran was required to rebut the statutory presumption that her transfer of assets "was motivated, in part if not in whole, by ... anticipation of future need to qualify for medical assistance" (citation omitted).
The court noted that the evidence showed that Mrs. Corcoran had suffered from mobility issues for several years prior to the filing of the Medicaid application, establishing that she was long at risk for needing long-term care. In addition, the court pointed out that there was no proof that Mrs. Corcoran and her husband had established a "pattern of giving," which, under the case law, has been frequently cited as an essential element to rebut the presumption that asset transfers made within the 5-year Medicaid look back period were made to avoid an asset spend down for Medicaid purposes.
The brief opinion can be read in its entirety here.