Posts Tagged ‘In re Molloy v. Bane’

Transfer Penalties for Medicaid Recipients

JANUARY 15, 1996 VOLUME 3, NUMBER 29

Applicants for long-term care Medicaid coverage (in Arizona, ALTCS) must disclose all transfers of assets made during the three-year period prior to applying for assistance. To the extent that the transfers are “uncompensated” they will make the applicant ineligible for Medicaid for a defined period of time. The value of the gift is divided by $2,651.42 (in Pima, Maricopa and Pinal counties); the result is the number of months of ineligibility.

Recent cases in two other states point up some of the specific problems which can occur with transfers. In one, the problem was the kind of asset transferred; in the other, the difficulty was the intent of the gift-maker.

Disclaiming Inheritance

Barbara Molloy, 56, lived in a New York nursing home. She had been on Medicaid for two years when her daughter Jennifer was killed in a car accident. The Medicaid agency informed her that any proceeds from her daughter’s estate needed to be assigned to the agency.

Ms. Molloy instead renounced her interest in her daughter’s estate. Although the value of the estate (including the possible wrongful death lawsuit) was unknown, the agency made Ms. Molloy ineligible, counting the renunciation as a transfer without consideration.

The New York court agreed with the Medicaid agency. Although Ms. Molloy had the right to renounce , her exercise of that right amounted to a gift, and Medicaid eligibility was lost. In re Molloy v. Bane, NY Sup. Ct, Appellate Division, October 2, 1995.

[The same result would occur in Arizona. The ALTCS program includes renunciations and disclaimers in its definition of “uncompensated transfers.”]

Fraudulent Transfers

Meanwhile, Ada and Adolph Ness were planning for their admission to a Minnesota nursing home. After Ada entered the Lutheran Brothers nursing home, she and her husband deeded their summer cabin to their nephews, Ronald and Michael Edman. A few weeks later, Adolph joined his wife in the nursing home; over the next year and a half the Nesses gave their nephews an additional $44,000 in cash.

After Mr. and Mrs. Ness ran out of money to pay for their nursing home bills, the home filed suit against the nephews to recover the transferred assets. The court ruled in favor of the nursing home, finding that there was no evidence that Mr. and Mrs. Ness received anything of value in return for the transfers. Furthermore, the court found, the transfers were made at a time when Mr. and Mrs. Ness intended to incur expenses they were otherwise unable to pay for. Lutheran Brethren Retirement Services, Inc., v. Ness, Minn. Court of Appeals, October 24, 1995.

[It is harder to predict whether the same result would be reached in Arizona. The result might hinge on the gift-givers intentions at the time.]

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