Are you trying to qualify for Medicaid by transferring assets?
At first glance, this may seem like a smart way to expeditiously
obtain the benefits Medicaid has to offer. However, without
proper Elder Law planning, transferring certain assets could
delay your Medicaid qualification. Congress has established a
period of ineligibility for Medicaid for those who transfer assets.
This period of ineligibility, also commonly referred to as the
“look-back” period, for all transfers is 60 months or 5 years.
While the look-back period determines what transfers will result
in penalties, the length of the penalty depends on the amount transferred.
The penalty period is determined by dividing the amount transferred
by the average monthly cost of nursing home care in the state.
That being said, the penalty period does not begin until you would
otherwise qualify for Medicaid except for the disqualifying transfer.
Early planning is essential to the success of gifting strategies.
It is important to be careful before making transfers. Any transfer
strategy must take into account the nursing home resident’s income
and all of his or her expenses, including the cost of the nursing home.
It is important to keep in mind, that if you give money to your children,
it belongs to them and you should not rely on them to hold the money
for your benefit. However well-intentioned they may be, your children
could lose the funds due to a number of reasons such as bankruptcy, divorce,
or lawsuit. As a result, you should not give away your savings directly to your
children. If you decide gifting is appropriate and the timing is right,
all transfers should be made to an Irrevocable Medicaid Asset
Protection Trust. As discussed in prior articles on this site, the Irrevocable
Medicaid Asset Protection Trust serves to greatly reduce the risk of
loss of transferred assets.
In addition, be aware that the fact that your children are holding your funds
in their names could jeopardize your grandchildren’s eligibility for
financial aid in college. The assets transferred to the Irrevocable Medicaid
Asset Protection Trust will not jeopardize your grandchildren’s ability to
obtain school loans or financial aid.
You should consider keeping enough assets in your name to pay for any
care needs you may have during the resulting period of ineligibility for
Medicaid and have sufficient resources to maintain your present lifestyle.
Advance Medicaid and Elder Law planning are very important and can
help you insure that you and your assets are properly protected.
While most transfers are penalized with a period of Medicaid
ineligibility of up to five years, certain transfers are exempt from
this penalty. Even after entering a nursing home, you may transfer
any asset to the following individuals without having to wait out a
period of Medicaid ineligibility:
* Your spouse (but this may not help you become eligible
since the same limit on both spouse’s assets will apply)
*Your child who is blind or permanently disabled.
*Into trust for the sole benefit of anyone under age 65
and permanently disabled.
In addition, you may transfer your home to the following
individuals (as well as to those listed above):
*Your child who is under age 21.
*Your child who has lived in your home for at least two years
prior to your moving to a nursing home and who provided you
with care that allowed you to stay at home during that time.
*A sibling who already has an equity interest in the house and
who lived there for at least a year before you moved to a nursing home.
Lastly, Transfers should be made carefully, with an understanding
of all the consequences. People who make transfers must be careful
not to apply for Medicaid before the five-year look-back period
elapses. This is because the penalty could ultimately extend even
longer than five years, depending on the size of the transfer. Before
applying for Medicaid, you should contact an elder law estate attorney
to make sure that you have cleared the five-year-look-back period.
For more information regarding qualifying for Medicaid making please
contact Douglas L. Kaune, esquire at 610 933 8069 or
email me at dkaune@utbf.com. Unruh, Turner, Burke & Frees, P.C.
is a full service law firm which has three convenient office locations in
Phoenixville, West Chester and Malvern, Pennsylvania.
The firm primarily services clients in Chester, Montgomery, Delaware,
Philadelphia, Bucks and Berks Counties, but can represent clients
throughout Pennsylvania
