Court of Appeals of Ohio, Eighth District, Cuyahoga
Appeal from the Cuyahoga County Court of Common Pleas Case
ATTORNEY FOR APPELLANT Richard A. Myers, Jr. Richard A.
Myers, Jr. & Associates, L.L.C.
ATTORNEYS FOR APPELLEE Michael DeWine Ohio Attorney General
Rebecca L. Thomas Assistant Attorney General Health and Human
BEFORE: Stewart, J., McCormack, P.J., and Blackmon, J.
JOURNAL ENTRY AND OPINION
J. STEWART, JUDGE.
Plaintiff-appellant Eleanor Paczko appeals from a decision of
the court of common pleas that upheld an Ohio Department of
Job and Family Services administrative decision not to
include certain transferred resources when it recalculated
her restricted Medicaid coverage period ("RCMP").
Finding no error in the trial court's decision, we
Although Medicaid is a program based on financial need,
persons with substantial personal assets can make themselves
eligible for benefits without first spending down their
assets. One way of doing so is called the "half-loaf
method. Under this method, a person needing nursing home care
gifts all excess personal assets to heirs, applies for
Medicaid, and is rejected for Medicaid because the gift
occurred during the applicable look-back window (in this
case, 60 months). This starts a penalty period in which the
person is ineligible for Medicaid benefits. The person's
heirs then gift back the amount of money needed to pay for
the person's nursing home expenses that are not covered
until the penalty period is over. Doing so cuts the penalty
period in half and allows the heirs to keep any remaining
Paczko used a reverse half-loaf method when applying for
Medicaid benefits. The undisputed facts show that she applied
for Medicaid benefits with the Ohio Department of Job and
Family Services (the "agency") on May 4, 2015.
In her application, Paczko disclosed that she transferred
$146, 122 to an irrevocable trust for her children during the
look-back period. Considering this an improper transfer of
assets during the look-back period, the agency found Paczko
eligible for Medicaid benefits and determined an RMCP of
23.09 months, running from April 2015 through part of March
2017. During the RCMP, Paczko's children returned $89,
227.38 directly to Paczko. In May 2016, Paczko requested a
recalculation of the RCMP based on the return of money. The
agency granted a partial recalculation that changed the RCMP
to 18.2 months, but declined to fully recalculate the RCMP
because all of Paczko's funds had not been returned.
Importantly, the agency declined to consider the disposition
of any funds returned after September 29, 2015. The agency
noted that effective September 29, 2015, R.C. 5163.30(C)(3)
had been amended to state:
no waiver of any part of the period of ineligibility shall be
granted if the amount the individual or individual's
spouse receives is less than the difference between what the
individual or individual's spouse received for the assets
and the fair market value of the assets.
Under the agency's interpretation of the amended statute,
there was no longer a recalculation period for partial,
returned funds - recalculation was allowed only if all of the
improperly transferred funds had been returned, in effect,
eliminating the half-loaf method.
Paczko appealed that decision. She acknowledged that R.C.
5163.30(C)(3) had been amended, but claimed that Ohio
Adm.Code 5160:1-3-07(K)(3), which implemented amended R.C.
5163.30(C)(3), had not been amended until January 1, 2016.
She argued that the administrative rule in place at the time
amended R.C. 5163.30(C)(3) went into effect - former Ohio
Adm.Code 5160:1-3-07(M)(4) - controlled over the statute.
That rule stated that "[w]hen only part of the asset or
its equivalent value is returned, a restricted medicaid
coverage period can be modified but not eliminated."
Paczko argued that the former version of the administrative
rule in effect at the time she made her application for a
recalculation of the RCMP should have applied.
A staff hearing officer denied the appeal, and that decision
was upheld in a further appeal to the Ohio Department of Job
and Family Services. The agency concluded:
While the Ohio Revised Code allows for the administrative
agencies to create rules [sic] supplement the statutes and
address activities that are numerous, technical and change so
often that they cannot be effectively enforced by statute
alone, that does not mean that a statute that is passed is
not in effect until a subsequent rule is passed. The statute
is in effect ...