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Appeals court holds that nursing home resident eligible for undue hardship exception despite penalty period

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The cost of long-term care can exceed the ability of most families to pay for it (a skilled nursing facility can cost as much as $100,000 a year or more).  One option is to qualify for government benefits such as Medicaid.   Because Medicaid is a need-based benefit, people hoping to meet eligibility requirements often look at gifting their resources but there’s a cost to doing so.  Medicaid rules disallow transfers of any assets within five-years of applying for benefits.  If a transfer has been made during that five-year period, the transfer for less than the fair market value generates a penalty period in which the beneficiary is ineligible for benefits.

That’s what happened to Margaret Traino, of New York.  She entered Tarrytown Hall Care Center for end-of-life care in June 2008.  Her condition improved and she continued to live in the nursing home facility for nearly three years.  During part of the time she was there, Traino was insolvent, subject to a Medicaid penalty for transferring assets below fair market value, and thus ineligible for Medicaid.

The nursing home applied to receive Medicaid reimbursement for the penalty period under the undue hardship exception.  That provision determines that an individual is not ineligible for Medicaid as a result of a transfer if that denial of eligibility results in undue hardship and the individual is unable to have the transferred asset returned.

The state denied the application on the grounds that the nursing home, by failing to evict Traino, failed to show she was unable to receive appropriate care without Medicaid.  The nursing home appealed.

The New York Supreme Court annulled the state’s decision and held that Traino was eligible for the undue hardship exception and that the nursing home offered proof that she was insolvent and unable to recover transferred assets and that no nursing home able to provide her with the necessary level of care would accept her.

For the full text of the decision, go here:



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