Last week I was telling you about Mary’s question to me. Her mom is in a Florida nursing home but she wants to bring her up north closer to Mary. Mom had given Mary $100,000 under a personal services contract which was drafted by a Florida attorney. Her question was, “Will New Jersey Medicaid treat the money she was given as a transfer for fair value or will it be subject to a Medicaid penalty, making her mom ineligible for Medicaid for a period of 10 months.
Mary told me she visited Florida 2 to 3 times a year. The services contemplated under the agreement included assistance with Mom’s activities of daily living as needed, doing laundry, paying bills etc. Based on what Mary had already told me obviously she wasn’t providing these services on a regular basis from New Jersey. Maybe the bill paying she could but not everything else. New Jersey will question the services provided. Mary had no explanation for how she could provide care from 1000 miles away.
I also told Mary that even if the bill paying is legitimate there still is a question regarding the charges. New Jersey Medicaid will question the reasonableness of the amount paid for the services. Mary’s contract also allows her to keep the entire amount no matter when Mom passes away. The question to be asked is whether anyone would pay a nonfamily member – a stranger – $100,000 lump sum for those services with no requirement of a refund. The answer is clearly no. That is why I told Mary that there would be a Medicaid penalty if she applies for Medicaid in New Jersey.
She asked me why it’s OK in Florida and not in New Jersey. That’s because Medicaid is administered on a state level. There are many differences from state to state in terms of the state regulations that fill in the gaps left where federal regulations are silent but also in the application of the federal regulations. Mary’s story is just another illustration of that point.