In November 2002, Mrs. Medder’s husband died. Her husband left her real estate and personal property in his Will. In May, 2003, Mrs. Medders filed a renunciation and disclaimer “renouncing” the gift in her husband’s Will. Less than three years after the renunciation, Mrs. Medders applied for Medicaid.
When Mrs. Medders applied for Medicaid, the Department of Community Health (DCH) denied her Medicaid application for nursing home benefits. DCH claimed that Mrs. Medders made a “gift” when she executed the disclaimer. The case went to a hearing before an administrative law judge who affirmed DCH’s position, denying Medicaid.
The case was appealed and, after the Department took no action, the appeal found its way to Superior Court. The Superior Court reversed the decision below and DCH appealed to the Court of Appeals. In reversing the Superior Court, the Court of Appeals noted that the Medicaid eligibility rules include restrictions on the disposition of assets for less than fair market value during the 36 month period prior to applying for Medicaid. In other words, a transfer of resources penalty may be imposed on gifts made during the look-back period. The court noted that the term “assets” includes income and resources that an individual “is entitled to receive, but does not receive because of the patient’s own action.” In this case, refusing to accept an inheritance was deemed to be a disposition of assets. The law does not prohibit gifts, but there are consequences for making them. “Undoubtedly, a Medicaid claimant may decline an inheritance under Georgia law. But the renunciation statute does not insulate that choice from the application of Medicaid’s eligibility regulations.”
The Medicaid claimant next argued that even if the renunciation was a transfer of resources, it should be deemed effective as of the date Mr. Medders died rather than the date of the renunciation. If that argument had been accepted, then the renunciation would have taken place more than 36 months prior to the Medicaid application and would be beyond the look-back period. The Court of Appeals disagreed and rejected that argument. The court found that the renunciation created a “legal fiction” that allows assets to pass as if Mrs. Medders had predeceased Mr. Medders. Nothing in the law requires DCH to accept that legal fiction when determining Medicaid eligibility. Accordingly, the date of the renunciation was the date of the transfer.
Notes: The Deficit Reduction Act of 2005 (effective 2/8/2006) increased the look-back period to 60 months; thus, the 36 month look-back discussed in Medders would be increased to 60 months in future cases. Under the Medicaid statute, a disposition is deemed to take place when someone transfers an asset or when someone reduces or eliminated ownership or control of an asset. Section 3257 of the State Medicaid Manual (HCFA 64), published by the Centers for Medicare and Medicaid Services, defines “assets” to include all income and resources the individual is entitled to receive but does not receive because of actions they have taken. Among the specific examples cited is “waiving the right to receive an inheritance.” See also 42 U.S. Code § 1396p(h)(1).
