If an applicant for Medicaid signed a contract with an assisted living facility agreeing to a pay privately for a period of time, any penalty resulting from a transfer of assets cannot begin until the end of the private pay period, even if the applicant is otherwise eligible for benefits. B.K. v Division of Medical Assistance and Health Services, OAL DKT. 18569-2016, Initial Decision (April 24, 2017), aff’d, Dir. (June 5, 2017)

On June 1, 2016, B.K., then age eighty-seven, entered an assisted living facility. Upon her admission to the facility, B.K. signed an admissions agreement containing a “Medicaid Waiver Addendum.” In the Addendum, B.K. promised to pay privately for all facility charges for two years, through May 31, 2018. The Addendum also provided that the facility would not accept Medicaid benefits for costs incurred by B.K. until twenty-four months after her admission, after the twenty-four month “private pay” period ended.

In August 2016, B.K. owned $225,958.32 in assets. A portion of these funds was used to pay for B.K.’s care at the facility. Several months later, on October 28, 2016, the remainder of the assets, $173,238.04, was transferred out of B.K.’s account, leaving a zero balance.

B.K. applied for Medicaid benefits in October 2016 even though, under the Addendum, the facility would not accept Medicaid until June 2018. B.K. sought immediate eligibility so that the penalty period resulting from the transfer of assets could run as the nursing facility was being paid during the “private pay” period. B.K. knew she was not financially eligible for the immediate payment of Medicaid benefits; rather, she was seeking immediate eligibility for benefits in order to permit the transfer penalty to run while she was paying privately for the facility. Medical eligibility for Medicaid was established on December 13, 2016.

The State Medicaid agency, the Division of Medical Assistance and Health Services (DMAHS), denied B.K.’s  application. DMAHS ruled that (1) since the facility would not accept Medicaid benefits until after two years of private pay passed, and since B.K. personally guaranteed payment for those two years before she could apply for Medicaid, the facility contract and the two years private payments must be considered as a resource in excess of the maximum available to B.K.; and (2) since the facility will not accept Medicaid payments for tow years based upon the Addendum, the DMAHS has no one to pay, and, therefore, eligibility cannot exist without a recipient for the Medicaid payment. B.K. appealed the denial of Medicaid, seeking a Fair Hearing.