Failure to Claim Share of Estate Results In Medicaid Ineligibility


Medicaid, the federal-state program which pays for about half of all nursing home care in the United States, is governed by eligibility rules intended to discourage applicants from making gifts as a way of qualifying. For example, Medicaid penalizes most gifts for a period up to three years—though the actual penalty is usually shorter. Sometimes the penalty applies even when the applicant does not think she has given anything away.

Josephine Perna lived in a Pennsylvania nursing home when her husband Michael died in 1997. He had actually been living in New Jersey at the time of his death. New Jersey law permits a surviving spouse to claim a share of her deceased spouse’s estate even if his will leaves less (or nothing at all) to the surviving spouse—a process usually referred to as “electing against the will.” Mrs. Perna took no steps to make an election against her husband’s will.

Though Mrs. Perna had been receiving Medicaid assistance with her nursing home costs before her husband’s death, the Pennsylvania Medicaid agency determined that her failure to elect against her husband’s will amounted to a gift and terminated her benefits.

Mrs. Perna made two arguments on appeal. First, she pointed out that she would have had to make a claim against her husband’s estate in New Jersey, and that she lacked resources to travel to that state or to make her claim. Second, she argued that she and her husband had been living separate and apart from one another at the time of his death, and that she was not actually entitled to claim a portion of his estate under New Jersey law.

The Commonwealth Court of Pennsylvania, that state’s intermediate appellate court, disagreed. Whether it was difficult for Mrs. Perna to make her claim or not, ruled the court, she had a duty under Pennsylvania Medicaid law to seek her entitlement from her husband’s estate, and her failure to do so was really a gift.

On Mrs. Perna’s second point, the court opined that all the evidence indicated that Mr. and Mrs. Perna lived apart for medical reasons only, and were not truly separated. In fact, noted the court, Mrs. Perna was sending a portion of her income every month to support her husband, as she was permitted to do under Medicaid regulations; that fact supported the court’s finding that the couple was not truly separated. Perna v. Department of Public Welfare, August 22, 2002.

Arizona’s Medicaid program for long term care, the Arizona Long Term Care System (ALTCS), would probably have made the same determination if presented with Mrs. Perna’s circumstances. One big difference: the amount to which Mrs. Perna would have been entitled (and, therefore, the value of the “gift”) would probably have been much less in Arizona.

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