What You Need to Know About Medicaid Asset Transfer Rules
There are several key requirements you must fulfill to qualify for Medicaid benefits. One of these requirements is that you must not have recently transferred any assets, over a certain value threshold.
The reason for this is that the federal government believes it is unfair for wealthy people or simply people who would not qualify for Medicaid to give all their money away solely for the purpose of qualifying for benefits. There are penalties for those who transfer assets for the purpose of qualifying for Medicaid without receiving a fair value in return.
The penalty imposed is a time period in which you would be ineligible for Medicaid after transferring the assets in question. The length of that time period is determined by dividing how much value you transferred by what Medicaid determines to be the average cost of a private nursing home in your area.
For example, imagine you live in an area where the average nursing home costs $5,000 per month. If you give away property that totals $50,000 in value, you will be ineligible for Medicaid for 10 months. Basically, for every $5,000 you transferred, you would lose a month of Medicaid eligibility.
Disclosures are important
Anyone applying for Medicaid must disclose all transactions that he or she made within a certain time period. This is often referred to as the “look back period.” It’s up to the Medicaid agency to determine if you transferred assets below fair market value during that period. Typically, the look back period is 60 months.
The law firm of BaumannKangas Estate does not do planning for persons intending to make asset gifts for the purpose of qualifying the person for Medicaid. However a Tampa estate planning attorney at BaumannKangas Estate Law can help you plan your estate giving for the purpose of benefiting your heirs who may be on or Medicaid or become Medicaid dependent so your gifts to them will not cause them to be disqualified.