Medicaid Transfer Exceptions—5/06/08

INTRO:  You may have heard that, if you give assets away, you create a 5 year look-back period for Medicaid eligibility.  And that's true, in most cases.  But not all. 

1.  FIRST, LET'S TALK BASICS.  MEDICAID IS THE PROGRAM THAT PAYS FOR LONG TERM NURSING HOME CARE?

A. That's right.  Medicaid is very important.  It will pay for your care in a nursing home, if you meet the program's strongest requirements.  In general, you cannot have much money or property.

2. CAN YOU GIVE MONEY OR PROPERTY TO YOUR KIDS, OR OTHERS, IN ORDER TO QUALIFY FOR MEDICAID?

A. Yes.  Transferring or giving away assets is probably the most common planning strategy used by families to try to protect part of their life savings.  To do it right is very complicated.  For example, gifts generally create a five-year look back period plus a penalty period that can keep you from getting Medicaid for a period from as short as a few days to many, many years B even longer than five years!

3. DO ALL GIFTS TRIGGER MEDICAID PENALTIES?

A. No.  There are several little-known gift strategies that trigger no Medicaid penalties and can enable a person to get Medicaid immediately.  I'll give you three real life examples:

First: we just had a family come into the office.  Mom broke a hip and is now confined to a nursing home, paying almost $7000 a month.  Soon, her life savings would be gone.  She wants to protect her daughter, who has a serious physical illness and cannot work.  So mom gave her home and savings to her daughter, and immediately qualified for Medicaid benefits.  The law allows any property, a home, savings and investments, to be transferred to a disabled child with no penalty.

Second example, again a real case: Mom lived with her sister, in mom's home.  Mom gave her sister a small ownership interest in the home.  About a year later, mom had to go to a nursing home.  She transferred the house to her sister with no Medicaid penalty.  There's an exception in the laws for transfer of a home to a sibling who lived in the home and had an ownership interest.

Third example: Daughter wanted mom to be able to stay in her home for as long as possible.  So daughter moved in with mom to provide care.  The daughter was able to keep mom home for several years.  But eventually, it just became too much, and mom entered a nursing home.  Mom transferred the home to her daughter and it was immediately protected.  The law allows a home to be transferred to a child who lived in the home for at least two years prior to the parent's institutionalization, if the child's care delayed the parent's institutionalization for at least two years.

4. SO NOT ALL TRANSFERS OR GIFTS CREATE A WAITING PERIOD FOR MEDICAID?

A.  No.  There are lots of little known exceptions to the rules.  These can't always be used, but when they do come up, they can be very valuable.

CLOSE:  Medicaid is such an important program, and you don't have to lose your entire life savings and home if you or a loved one needs care.