Account Held on Behalf of Disabled Family Member Not a Countable Asset for Medicaid

An appeals court in New Jersey ruled that a bank account held by a Medicaid recipient would not be considered a countable resource because the funds were being held on behalf of the applicant’s disabled grandson and not for the recipient’s personal use.

I.M. v. Division of Medical Assistance and Health Services (N.J. Super. Ct., App. Div., No. A126509T3, June 3, 2011) (unpublished).

Facts.  A 79 year old Medicaid recipient (“Ms. M”) was named the sole caregiver of her 21-year-old mentally disabled grandson, (“J.M.”).  J.M. received a special needs grant of $2,000 from the New Jersey Division of Developmental Disabilities (“DDD”) in December of 2007.  Ms. M spent some of the funds for various needs of J.M., as intended, and established a bank account to hold the remaining grant funds ($1,480) for J.M.

Upon a review of Ms. M’s Medicaid status, The Division of Medical Assistance and Health Services (“DMAHS”) deemed the $1,480 to be a countable resource of Ms. M, thereby increasing her resource total in excess of the Medicaid limit of $2,000.  As a result, DMAHS terminated her Medicaid benefits.  In response to having her benefits terminated, Ms. M transferred the remaining grant funds to a new account in her grandson’s name, and added herself as a permitted user on the account.

At the primary hearing, the Administrative Law Judge concluded that the termination of the Medicaid benefits had been improper, but that the bank account was still considered an available resource to Ms. M, so she appealed.

Ruling.  The Superior Court of New Jersey, Appellate Division, reversed the decision of the Administrative Law Judge, agreeing that the “availability” of countable assets under Medicaid regulations intends a legal, rather than physical, type of possession.  Although Ms. M has physical access to her grandson’s grant funds, she simply held them on his behalf “as his fiduciary, restricted in their use by the very terms of the DDD grant, as well as of the bank account in which they are held.”  Ms. M’s Medicaid benefits were reinstated.