By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Medicaid Application Attorney

In a recent unpublished decision from the Appellate Division, N.K. v. Division of Medical Assistance and Health Services, we are reminded once more about the requirement of keeping records and why this is so important for Medicaid planning.  I have talked before about transferring property for less than fair market value within 5 years of the date of application, and the penalty period that is imposed if the Board of Social Services finds that you did this.  Remember, if numerous transactions have taken place with sums of money missing from bank accounts, or a house gifted to a loved one, Medicaid and the Board of Social Services presumes that the transfer(s) was made to qualify for Medicaid, and you must prove convincingly that these transfers were not done to make yourself eligible for Medicaid.  I can think of no greater failure to show proof that you did this then this case.

N.K. was admitted to a nursing home in October 2011 and applied for Medicaid on March 20, 2014.  So between March 2009 and March 2014, did N.K. make transfers for less than fair market value?  Well yes, according to the Bergen County Board of Social Services.  $69,200 was transferred from her bank account between March 2009 and February 2010.  N.K. claims $50,000 of it went to pay for a full-time live-in aide for her husband, who had Alzheimer’s, and the rest was for living expenses.  The problem?  The $69,200 was made out to “cash,” not to the aide directly nor the agency involved, nor did the check contain anything on it indicating it was to pay for the aide.  The checks were also for varying amounts and were withdrawn on random days, not following any type of consistent schedule.

N.K. requested a fair hearing appealing the penalty period.  At the hearing, witnesses knew the aide was in the house, but didn’t know if the aide lived there full-time nor could they identify who she was.  They also couldn’t say if N.K. used that additional money to pay for her daily living expenses.  N.K. produced a letter from the aide’s agency stating that in fact there was somebody on the premises from February 2007 through November 2009, but nothing about whether the aide was full-time and how much she was paid.  The judge presiding over the hearing (ALJ) found the evidence to be credible, determined the money was paid for a purpose other than to be eligible for Medicaid, and reversed the penalty.

However, the Director of NJMAHS, with the affirmance of the Appellate Division, reversed the ALJ, rejecting the ALJ’s credibility findings and also holding that no evidence existed that the $69,200 was used to pay for the aide and N.K.’s living expenses, as the withdrawals were sporadic and inconsistent, showing no certain pattern of payment to anyone as the checks were not marked to pay for the full-time aide.  The witnesses also did not provide substantive information regarding what the aide was doing there, only assumptions and speculations, and did not provide what the checks were for.  Therefore, the presumption of an improper transfer was not overcome according to both the Director and the court, and the penalty was imposed.

Even if N.K. was paying for someone, a lack of record of the payments for the aide cost her seven months of nursing home care paid for by Medicaid.  It’s hard to tell from the facts what type of payment arrangement the aide had with N.K.  If the aide was being paid under the table, then there is not going to be a record of what happened, which will make proving that the money cashed out was going to the aide that much harder.  What I would have liked to see is the reasons the ALJ gave as to why he or she believed the witnesses and how he or she made the finding that N.K. did use the money to pay for the home health aide.  The opinion seems to skirt over that in favor of discussing why the Director rejected the ALJ’s determination.

To discuss your NJ Medicaid Application matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at  Please ask us about our video conferencing consultations if you are unable to come to our office.