A New York appeals court ruled that a mother’s gift to her daughter incurred a Medicaid transfer penalty, even when the daughter used part of the money to pay for her mother’s care.

Petitioner Martha Weiss gave $78,237 to her daughter, who used the majority ($41,600) of the money to pay her mother’s care costs in an assisted living facility.  New York Medicaid rules provide that where a portion of assets that were gifted are returned to a Medicaid applicant, the transfer penalty period can be reduced for the returned portion.

However, the Court took a narrow reading on what constitutes a return of assets.  The regulation says an asset is returned if it’s used to pay for the applicant’s “nursing facility services.”  The NY Medicaid agency took the position that care in an assisted living facility is not “nursing facility services,” and the Court agreed.  Ms. Weiss was hit with the full penalty period.

It seems to me an overly technical position.  However, it’s worth noting that in New Jersey, the Petitioner wouldn’t have even gotten that far.  Under NJ Medicaid rules, the penalty period is reduced only for a full return of assets.