Angeline Ellis lent her son $17,000 four years ago. Ms. Ellis, who is now 83, required long-term care and her son could not repay the remaining $4,750 he owed under the loan. In the past, Ms. Ellis’ period of ineligibility for Medicaid would be based on the unreturned assets. However, in Ellis v. Minn. Dept. of Human Services (D. Minn., No. 11-3411, Nov. 30, 2011), a U.S. district court upheld a Minnesota rule that shortens the Medicaid penalty period only when the entire amount of a transferred asset is returned. Because of the court’s ruling, Ms. Ellis was required to wait out a nearly four month penalty period based on the original amount she loaned her son.
Ms. Ellis sued and sought a preliminary injunction, arguing that states are prohibited from restricting Medicaid eligibility beyond what was in effect when the 2010 Federal Health Reform Law was passed. The U.S. district court denied the injunction and affirmed the permissibility of the state’s actions. However, the court determined that Ms. Ellis’ penalty should be based on the remaining loan, decreasing her penalty period to one month.
See Federal Court Upholds Minnesota Rules Disallowing Partial Cures, ElderLawAnswers, Dec. 5, 2011.
