How Transfers to Family Members Can Jeopardize Your Future Medicaid Benefits
It is natural to want to financially help family when a person has the means, especially as one gets older and sees their own children start families. However, a person never knows when a medical event or accident could send them to a nursing home for an extended or permanent stay. Paying for nursing home care is outside the means of most people, and many need Medicaid benefits to cover the costs for this level of care. Medicaid is based on financial need, though, and too much money or too many gifts around the period in which an application for benefits is submitted could result in penalties and periods of ineligibility. Avoiding this negative outcome highlights why the help of an elder law attorney with experience in Medicaid law is so crucial when planning for the possibility of Medicaid or needing to figure out what must be done to qualify as soon as possible. One area that can be particularly tricky is when and how gifts or transfers to family members can be done without triggering possible penalties for violating the lookback period, a five-year window in which the government will scrutinize the sale and transfer of assets to determine if they were permissible under federal regulation.
Medicaid Asset Transfer Rules
As noted, Medicaid is a needs-based program that expects all recipients to liquidate and use any available asset for the payment of nursing home care before benefits will be made available. Thus, the asset and income limits for this program are quite low, presently at $2,313 for monthly income and $2,000 in assets. To ensure that applicants do not give away property in order to qualify for Medicaid, there is a five-year look back period that officials use to determine if anything was transferred for less than fair market value. All gifts fall into this category, unless to a spouse, and the result is disqualification and exclusion from benefits for a certain period of time based on the total amount of the transfers made. Further, the penalty period for impermissible transfers would not even start until assets are spent down to acceptable limits and would qualify for benefits but for the penalty. This could mean a person paying for the entire cost of nursing home care for several years before Medicaid would become available, which is likely to entirely deplete a person’s savings, or at least severely reduce it.
Avoiding the Look Back Penalties
Sound advanced planning is the best way to guard against penalties. Starting the process of transferring assets to family members well in advance of declining health will mean more than five years will elapse between the transfer and the application for Medicaid, thereby avoiding this window. In addition, certain assets are exempt from look back period consideration, including transfers between spouses, to blind or disabled children, trusts for the benefit of blind or disabled children, or trusts for another disabled individual under the age of 65. Further, in Florida, spouses can refuse responsibility for a spouse’s medical bills, which means if all the couple’s assets are transferred to the healthy spouse, he/she can disclaim responsibility and allow the other spouse to qualify for Medicaid. In addition, a child caretaker who lives in the Medicaid applicant’s home for at least two years before benefits are requested can receive the parent’s home without triggering a penalty, provided he/she provided care that delayed the applicant’s entry into a nursing home. Thus, there are options for avoiding the look back period without sacrificing assets to nursing home costs.
Talk to an Elder Law Attorney
Medicaid is a complicated area of law, and if you are in need of benefits or want to plan ahead for this possibility, talk to a Clearwater Medicaid attorney today. William Rambaum knows the obstacles you can face in the quest for Medicaid benefits, and can provide sound recommendations to get you the outcome you desire. Contact the firm to schedule an appointment.