New Law Imposes Liability for Nursing Home Costs

Attorney Christine S. Anderson

September 2013

Effective July 2, 2013, Senate Bill 138 became law. This new law imposes liability for nursing home costs on persons who receive a nursing home resident's assets when the transfer of those assets is made within five years of the Medicaid application and results in Medicaid disqualification. The liability is to the nursing home which is not otherwise able to collect from Medicaid as a result of the disqualification. The potential liability is limited to the amount of assets transferred. In addition, a fiduciary (an agent under a power of attorney, a trustee, a guardian or a representative payee) who is in control of income or assets of a nursing home resident is potentially liable for the costs of nursing home care if the fiduciary negligently fails to apply for Medicaid for the resident. Finally, a fiduciary or joint account holder who has access to a nursing home resident's income or bank accounts is liable to the nursing home if the fiduciary or joint account holder refuses to pay the patient liability amount due.

The problem that this law attempts to address is the not-uncommon situation in which a future nursing home resident or fiduciary acting on his or her behalf transfers assets of the individual. The individual enters a nursing home, applies for Medicaid, and then is disqualified from receiving Medicaid. In this situation, the nursing home is stuck with a resident for whom Medicaid will not pay and who has insufficient assets or income to pay for his or her own care. This law is intended to provide nursing homes with a means to recover the costs of care by pursuing the recipients of the nursing home resident's asset or the individual in control of the nursing home resident's assets.

Although Governor Hassan recognizes the problems that this bill attempts to address, she let the bill become law without her signature. She issued a detailed press release explaining her concerns with the law, including her concerns about due process of law protections of those potentially liable. For the full press release, click here.

This new law means that individuals considering making gifts in anticipation of applying for Medicaid must be virtually certain that they will not be disqualified from receiving Medicaid as a result of the gifts. Otherwise, along with the gifted assets, they are also giving their loved ones potential liability to be sued by a nursing home. In addition, fiduciaries, who are typically adult children, must exercise extreme caution when considering making gifts, and must be diligent in applying for Medicaid in a timely manner and using an individual's assets to pay for his or her nursing home costs.