State Not Required to Treat Medicaid Applicant’s Multiple Transfers as One Transaction

A Kentucky appeals court rules that a Medicaid applicant’s penalty period is appropriate because the state is not required to treat multiple transfers as a single transaction when the transfers are not related. Marcum v. Commonwealth (Ky. Ct. App., No. 2014-CA-000487-MR, April 10, 2015).

In July 2011, Betty Marcum applied for Medicaid and the state imposed a penalty period based on a transfer of assets. During the penalty period, Ms. Marcum sold her home and transferred the proceeds into an irrevocable trust, with her family gifting a portion of the money back to her. She also made other transfers from her bank account. In June 2012, Ms. Marcum applied for Medicaid benefits again. The state imposed a second penalty period, running from the date of the second application.

Ms. Marcum appealed, contending that the state incorrectly calculated the penalty period. The state’s Medicaid operations manual requires that multiple related transfers be counted as a single transaction that occurred on the date of the first transfer and that once a penalty period has been established, it runs until expiration. Ms. Marcum argued that these provisions required the state to treat all of the disqualifying transfers together in a single penalty period. A state appeal board upheld the imposition of the second penalty period, and a trial court affirmed.

The Kentucky Court of Appeals affirms, holding that because Ms. Marcum’s second application involved transfers that were not related to the first penalty period, the state was not required to treat the transfers as a single transaction. The court rules that the state cannot “simply recalculate the first disqualification period to include transactions occurring after that period was imposed.” Similarly, the state cannot allow “the first disqualification period to be modified after it had expired.”

Remember, although federal funded, Medicaid rules do vary by state. For a free initial consultation or more information on how to protect and preserve your assets with Medicaid Planning, click here.

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