November 30

No Medicaid Transfer Penalty on Sale of House to Granddaughter

Reversing a lower court, an Indiana appeals court rules that the state should not have imposed a transfer penalty on a Medicaid applicant who sold her house to her granddaughter because the evidence shows the house sold for fair market value. Brown v. Indiana Family and Social Services Administration (Ind. Ct. App., No. 87A01-1501-PL-38, Nov. 18, 2015).

Ada Brown and her husband transferred their house to a trust and made the trust irrevocable. Mrs. Brown moved into a nursing home and the trust sold the house to her granddaughter for $75,000. Two years later, Mrs. Brown applied for Medicaid benefits. Based on information from the county assessor that showed the value of the house as $91,900, the state determined that the house was sold for less than fair market value and assessed a transfer penalty.

Mrs. Brown appealed, arguing that the value of the house was reduced due to the need to replace the sewer system. A hearing officer and the trial court affirmed the penalty period, and Mrs. Brown appealed.

The Indiana Court of Appeals reverses, holding that the evidence shows the house was not transferred for less than market value. The court notes that there was no evidence that the tax assessment used by the state reflected the price of the house at the time of the sale. According to the court, “the evidence reveals a willing buyer and seller, albeit with a family relationship, and no evidence that either was under any compulsion to consummate the sale.”

For the full text of this decision, go to:

November 26

Medicaid Applicant’s Assets Not Reduced By Probate Court Guardianship Orders

A Texas court of appeals rules that probate court guardianship orders setting monthly needs allowances and authorizing payments do not act as encumbrances against a Medicaid applicant’s bank account because they do not require the payment of specific legal debt. Henson v. Texas Health and Human Services Commission (Tex. Ct. App., 3rd Dist., No. 03-13-00621-CV, Nov. 5, 2015).

Nursing home resident Mary Henson was under guardianship. The probate court entered an order setting a monthly allowance for Ms. Henson’s needs and another order authorizing the payment of certain expenses. Ms. Henson applied for Medicaid benefits in April 2009. The state granted her benefits effective April 1, 2009.

Ms. Henson appealed, arguing that the state should have found her eligible for benefits on March 1, 2009. Ms. Henson acknowledged that her bank account had $2,239.77 on March 1, 2009, but she argued that the probate court orders were encumbrances that should have been deducted from the account. The trial court affirmed the state’s decision, and Ms. Henson appealed.

The Texas Court of Appeal affirms, holding that the probate court orders were not encumbrances. The court rules that even if the law compels the state to treat a court order as an encumbrance against a bank account if the order requires the payment of a legal debt, the evidence shows that the probate orders in this case “do not operate to restrict [Ms.] Henson’s guardian’s ability to access any funds and that they are not orders requiring the payment of any specific legal debt.”

For the full text of this decision, go to:

November 23

Resident Who Transferred Assets and Applied for Medicaid Breached CCRC Contract

A New York appeals court holds that a continuing care retirement community (CCRC) resident is required to spend the assets disclosed in the CCRC’s admission agreement on nursing home care before applying for Medicaid. Good Shepard Village at Endwell Inc. v. Yezzi (N.Y. Sup. Ct., App. Div., 3rd Dept., No. 520621, Nov. 5, 2015).

Hazel and Peter Yezzi moved into a CCRC after signing an admission agreement that disclosed their assets. The contract with the CCRC provided that that the Yezzis could not transfer their assets for less than fair market value if it would impair their ability to pay their monthly fees. Mrs. Yezzi entered the nursing home, transferred her assets to Mr. Yezzi, and applied for Medicaid. The CCRC refused to accept the Medicaid payments.

The CCRC sued Mr. Yezzi (Mrs. Yezzi died in the nursing home) for breach of contract and fraudulent conveyance, arguing that the Yezzis were obligated to use the funds disclosed in the CCRC admission agreement before applying for Medicaid. The trial court granted the CCRC summary judgment, and Mr. Yezzi appealed.

The New York Supreme Court, Appellate Division, 3rd Dept., affirms, holding that Mrs. Yezzi’s transfer of assets for less than fair market value constitutes a breach of contract. According to the court, under federal and state law the CCRC “could require a resident to first spend the resources identified upon admission before applying for Medicaid” because “the essence of the CCRC financial model requires a tradeoff between the resident and the facility, in which the resident must disclose and spend his or her assets for the services provided, while the facility must continue to provide those services for the duration of the resident’s lifetime even after private funds are exhausted and Medicaid becomes the only source of payment.”

For the full text of this decision, go to:

November 17

Transfers While Applicant Was Healthy Were Not Made in Order to Qualify for Medicaid

A New York appeals court holds that a Medicaid applicant who transferred money when she was in good health and two years before entering a nursing home presented enough evidence to rebut the presumption that she transferred the money in order to qualify for Medicaid. Sandoval v. Shah (N.Y. Sup. Ct., App. Div., 2nd Dept., No. 2014-11442, 2767/13, Sept. 30, 2015).

Between May 2007 and April 2008, Cecelia Sandoval made several transfers to her children to help them pay bills. She had more than $250,000 in assets remaining after these transfers. In 2010, Ms. Sandoval began exhibiting signs of dementia and entered an assisted living facility and eventually a nursing home. After she depleted her assets, she applied for Medicaid. The state imposed an 11-month penalty period.

Ms. Sandoval appealed the penalty period, arguing that the transfers were not made in anticipation of the need to apply for Medicaid benefits. The state affirmed the penalty period, and Ms. Sandoval appealed to court. 

The New York Supreme Court, Appellate Division, grants her benefits, holding that Ms. Sandoval presented enough evidence to rebut the presumption that she transferred assets in order to qualify for Medicaid. The court rules that the fact that at the time of the transfers, Ms. Sandoval was in good health and living independently and that she still had $250,000 in assets after making the transfers is evidence the transfers were not motivated by a future need for Medicaid.

For the full text of this decision, go to:

November 12

Medicare Open Enrollment Means It’s Time to Shop Around

Are you happy with your Medicare coverage? Could you get a better plan for less money? It is time to review whether your plan or plans are working for you. Medicare’s open enrollment period, in which you can enroll in or switch plans, runs from October 15 to December 7.  A careful analysis could save you hundreds or even thousands of dollars on next year’s coverage.

During this period you may enroll in a Medicare Part D (prescription drug) plan or, if you currently have a plan, you may change plans. In addition, during the seven-week period you can return to traditional Medicare (Parts A and B) from a Medicare Advantage (Part C, managed care) plan, enroll in a Medicare Advantage plan, or change Advantage plans. Beneficiaries can go to or call 1-800-MEDICARE (1-800-633-4227) to make changes in their Medicare prescription drug and health plan coverage.

Even beneficiaries who were satisfied with their plans in 2015 need to review their options for 2016. Prescription drug plans can change their premiums, deductibles, the list of drugs they cover, and their plan rules for covered drugs, exceptions and appeals. Medicare Advantage plans can change their benefit packages and as well as their provider networks. 

While the federal Centers for Medicare and Medicaid Services (CMS) says that the average premium for a basic Medicare Part D prescription drug plan in 2016 will remain stable, at an estimated $32.50 per month, Avalere Health, a consulting and research firm, reports that premiums for the 10 most popular drug plans will rise an average of 8 percent next year, and five of these plans will see double-digit hikes. According to CMS, the average Medicare Advantage premium is expected to decrease from $32.91 on average in 2015 to $32.60 in 2016.

Remember that fraud perpetrators will inevitably use the Open Enrollment Period to try to gain access to individuals’ personal financial information.  Medicare beneficiaries should never give their personal information out to anyone making unsolicited phone calls selling Medicare-related products or services or showing up on their doorstep uninvited.  If you think you’ve been a victim of fraud or identity theft, contact Medicare. 

Here are more resources for navigating the Open Enrollment Period: