A Medicaid denial for nursing-home or other long-term care can be appealed at a fair hearing, which federal law requires every state plan to offer to any individual whose claim for medical assistance is denied or not acted upon with reasonable promptness. The reason stated on the denial notice decides what the appeal is about, and the notice and the state's rules govern the deadline and how to request the hearing.
A letter has arrived saying that your mother, your father, your husband or your wife does not qualify for Medicaid to pay for long-term care. Meanwhile the nursing-home bill keeps coming, and the family is trying to decide whether to fight the decision, fix something and reapply, or keep paying privately while the savings shrink. People facing a denial like this may not be sure whether the state got it wrong or whether something in the family's own history, such as a gift, an account or the house, caused it. This page explains the appeal right, the reasons for a denial, and the federal rules on transfers, spouses, the home and estate recovery that sit underneath them.
Your Right to Appeal a Medicaid Denial
Under 42 U.S.C. § 1396a(a)(3), every state Medicaid plan must give a fair hearing before the state agency to any person whose claim for medical assistance is denied or is not acted upon with reasonable promptness. The federal Eligibility Policy page describes the same right as covering a denial, an action by the state agency the person believes was wrong, or a state's failure to act with reasonable promptness. Because this is a requirement of federal law, it exists in every state, from Maine to Arizona.
The first document to read is the denial notice itself. It gives the state's reason, and it explains how and by when a hearing can be requested. The notice and the state's rules govern the timing.
A fair hearing is an administrative appeal inside the state's own Medicaid system. It is not a lawsuit. States can structure their appeals in different ways. CMS notes that a state may run hearings through its Medicaid agency or delegate them to another state agency with federal approval. Whether a court can review the outcome afterward, and how, depends on the state's own rules.
Reasons Medicaid Denies Long-Term Care Applications
Long-term-care denials can rest on several kinds of reason, and knowing which one applies shapes everything that follows.
- Excess countable assets. A countable asset is property the state counts toward its Medicaid asset limit. Exempt assets are left out. Which assets are exempt depends on the state, and the person's home is subject to a federal home-equity limit (42 U.S.C. § 1396p(f)). A denial may rest on how one account, policy or piece of property was classified. The Medicaid spend-down process is closely tied to this question.
- A transfer penalty. A gift or a sale for less than fair market value made during the look-back period can lead to a penalty period. The look-back period is the stretch of time before the application during which the state reviews transfers. The penalty period is the stretch of time during which Medicaid will not pay for long-term care. Both are explained in more detail below.
- Income above the state's limit. Income rules and figures differ from state to state, so no single number applies nationally.
- Missing or incomplete documentation. A denial for missing bank statements or unverified records is procedural. It can sometimes be resolved by supplying what was missing, without a full hearing.
- Residency or categorical eligibility. The state may find that the person does not live in the state or does not fit a covered eligibility group.
The reason printed on the notice decides which rules matter for the appeal. That is why the notice comes before anything else.
What an Elder-Law Attorney Does in a Medicaid Appeal
An elder-law attorney is an attorney whose practice focuses on legal issues affecting older adults, including Medicaid eligibility, long-term-care planning and appeals. In a Medicaid appeal, three documents are at the center: the denial notice, the application as it was filed, and the records behind it. The question is whether the state's decision was legally correct on those facts.
What an appeal turns on depends on the type of denial:
- Asset denials. An appeal can turn on whether each asset was correctly treated as countable or exempt and whether the spousal-protection rules were applied.
- Transfer-penalty denials. An appeal can turn on whether a federal exception applies, how the penalty was calculated, and when it was set to begin.
- Procedural denials. The missing documents can be supplied.
Every state runs its own long-term-care Medicaid program, with its own forms, figures and hearing practice. California's Medi-Cal rules are not Florida's, and neither state's rules are New York's. For that reason, both the specific state's program and federal law matter. The broader role is described in what a Medicaid planning attorney does.
The Five-Year Look-Back and Transfer Penalties Explained
Federal law sets the look-back at 60 months, or five years, for any transfer of assets made on or after February 8, 2006 (42 U.S.C. § 1396p(c)(1)(B)(i)). For a person in a nursing facility, the window runs back from the first date on which the person was institutionalized and had applied for Medicaid.
If assets were given away or sold for less than fair market value inside that window, the state calculates a penalty. It divides the total uncompensated value of everything transferred by the average monthly private-pay cost of nursing-facility care in the state (or, at the state's option, in the community where the person is institutionalized) at the time of application. States may not round the result down (42 U.S.C. § 1396p(c)(1)(E)).
The penalty begins on the later of two dates: the first day of a month during or after which assets were transferred for less than fair market value, or the date the person is eligible for medical assistance and would otherwise be receiving institutional-level care under an approved application but for the application of the penalty period (42 U.S.C. § 1396p(c)(1)(D)(ii)). A penalty also cannot begin during another period of ineligibility under the same subsection. A gift made four years before the application is penalized in the same way as one made four months before.
Not every transfer is penalized. The statute lists exceptions, including a transfer to the person's spouse or to another for the sole benefit of the spouse, which carries no transfer penalty (42 U.S.C. § 1396p(c)(2)(B)(i)).
States can differ from the federal rule. California's look-back period, and the date it began, are set by California's own rules; see California Medi-Cal asset limits. This section explains the rules. It does not suggest any particular transfer.