Caregiver Agreement Including Services Provided by Nursing Home is a Disqualifying Transfer for Medicaid Eligibility Purposes

A personal care services agreement requiring a lump sum pre-payment that included services already provided by the Medicaid applicant’s nursing home is an uncompensated transfer for Medicaid eligibility purposes. 

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Austin v. Indiana Family and Social Services Administration (Ind.App.Ct., No. 64A04-1008-MI-514, April 26, 2011).

Facts.  Ms. Austin, aunt of James Mack, was cared for by James and his wife Julianne from 2002 until September of 2007 when she moved into a nursing home.  James and Julianne were previously appointed as Ms. Austin’s attorneys-in-fact, and executed a lump-sum caregiver agreement on her behalf two months after she moved into the nursing home.  The agreement detailed an arrangement whereby James and Julianne agreed to provide caregiver services to Ms. Austin for the rest of her life, and Ms. Austin would pay James and Julianne an upfront, non-refundable lump sum of $35,000 (calculated in accordance with Ms. Austin’s life expectancy).  The services to be performed included laundry, shopping, food preparation, grooming, attending family meetings and negotiating with health-care professionals.


Immediately after the caregiver contract was in place, Ms. Austin applied for Medicaid benefits.  Her application was approved; however, she was assessed an 8 month uncompensated transfer penalty (during which time she would not receive Medicaid benefits) calculated based on the payment of $35,000 to James and Julianne earlier that month.  Ms. Austin appealed the decision.


Appeals Court Decision.  Both the Indiana Family and Social Services Administration (IFSSA) and the Court of Appeals of Indiana upheld the 8-month ineligibility penalty, holding that a transfer made pursuant to a valid personal care services agreement is considered made for fair market value if the caretaker “is or has been actually providing valuable services to a nursing home resident that substantially exceed the services provided by the nursing home.”  According to this standard, the payments made in accordance with the agreement were an uncompensated transfer since James and Julianne intended to provide services that Ms. Austin was already receiving at the nursing home.  In order to avoid the penalty, the services provided should have been “substantially in excess of what the nursing home provided.”