Articles

Medicaid Asset Transfers

By Kim Boyer
Elder Law News
May 2004

Can someone transfer assets and be eligible for Medicaid? If the applicant or the applicant’s spouse transfers assets to someone for less than fair market value, a penalty period will be imposed. This means that the applicant will be ineligible for Medicaid for a period of time, called the disqualifcation period.

What is the look-back? Asset transfers are evaluated during the 3 year “look-back” period beginning with the month of application. Asset transfers are also evaluated at anytime after the individual applies for Medicaid. The “look-back” period is extended to 5 years when there is a transfer of assets involving a trust.

What is the disqualification period? The number of months for which a person is ineligible for Medicaid is the amount of gift divided by the average cost of nursing home care in Nevada, which amount is published each year. Currently, the average cost of nursing home care in the State of Nevada is determined to be $4,583.00 per month.

For example, if an applicant transfers assets worth $45,830.00, that amount is divided by $4,583.00/month, and results in a 10 month period of ineligibility. If an applicant transfers assets worth $197,069.00, that amount is divided by $4,583.00/month, and results in a 43 month period of ineligibility. However, the maximum amount of time the applicant is ineligible for Medicaid is 36 months (60 months if transfer front trust), so long as the applicant does not apply prior to the end of the 36 month disqualification time and violate the look-back rule. This is a serious trap.

Are there any exceptions to the transfer rules? Medicaid coverage will not be restricted where title to the home was transferred to (a) the individual’s spouse, (b) a child under 21 or blind or disabled child, (c) the individual’s sibling who has an equity interest in the house and who has resided in the home for at least one year before the date the individual becomes institutionalized, or (d) a child who was residing in the home for at least two years before the date the individual becomes institutionalized and who provided care to the individual which permitted the individual to reside at home rather than in an institution.

Resources, other than the home, can be transferred directly or into trust for the individual’s child who is under age 21 or who is blind or disabled; or transferred to any individual under age 65 who is disabled.

What are the concerns about transfers of assets? The following should be addressed before divesting assets:

• Analyze the tax implications of possible transfers.
• Consider possible claims of exploitation.
• Consider the full range of long-term care issues, options, consequences and costs.
• Work to preserve and promote dignity, self-determination, and qualify of life in the face of difficult alternatives.

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