CMS confirms that transfer penalty for Medicaid home care applicants starts to run at time of application

Followers of this blog know that when a person applies for Medicaid under the New Jersey MLTSS program or other state programs that pay for nursing homes, assisted living or home health care services, there is a 5-year look-back that is done by the agency to determine if a transfer penalty should be imposed for gifts made during the 5 years preceding the application. The penalty is a period of time in which the State won’t pay for the care. The greater the amount that was gifted, the longer the penalty period. There has been a problem for years that was inadvertently created when the Medicaid law was amended by the Deficit Reduction Act of 2005 (“the DRA”). The problem was caused by an interpretive guidance memo called State Medicaid Director Letter (SMDL #06-018) published on July 27, 2006 by CMS. The DRA itself specified that the start date of the penalty was to be “the later of (1) the month during or after which a transfer is made or (2)…

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