Many people will try to give away some or much of their assets in an effort to qualify for Medicaid. However, if done within five years of applying for coverage for long-term care, Medicaid will count this as a gift given in attempt of qualifying for Medicaid benefits. Thus, a period of ineligibility will begin, as Medicaid will think that those assets could have been used to pay for care.
You should know that not all transfers or gifts will usher in a period of ineligibility though. There are, in fact, a number of exceptions to the rule against gifting during that five-year period. Some of the most common exceptions are as follows:
The Home: A person’s house is subjected to a very special set of rules that have been put in place in both state and federal Medicaid laws. A home is usually exempt (in that it doesn’t count toward an asset limit and is not required to be sold to pay for care) if it meets the following conditions:
- It is currently occupied by the applicant or his or her spouse.
- The equity value of the home totals out at less than $543,000 (or $814,000 in states like CA, NY, CT)
- The title must be held in the applicant’s name or that of his or her spouse.
In many cases, however, the home can’t be gifted to someone without penalty (since home exemption requires an applicant or spouse to live in and own the home). There are exceptions to this too, though, and as per federal law, a period of ineligibility begins when the home is transferred unless it is to one of the people listed below:
- The spouse of the applicant
- A child of the applicant under the age of 21
- A child who is permanently blind and/or totally disabled
- The sibling of an applicant who has equity interest in the home and has lived there for at least a year immediately prior to the date the applicant is institutionalized
- A son or daughter of the applicant (other than that previously described) who has been in the home for a period of at least two years before the date of institutionalization and who (as determined via the state) gave care to the applicant, which let him or her reside at home rather than in a facility or institution.
Transfers for the Benefit of the Spouse
Such transfers are not penalized by Medicaid since assets held in the name of either spouse are included when determining eligibility. There is no penalty under federal law if:
- The asset was transferred to the spouse or another for the sole benefit of the spouse, or
- The asset was transferred from the applicant’s spouse to another for the sole benefit of the applicant’s spouse.
Transfers to a Child
The applicant may transfer any resources (including the home) to a disabled child without fear of penalty. Penalties will not be incurred when the asset was transferred to the applicant’s child, or to a trust solely for the benefit of the child, so long as he or she is either blind or otherwise permanently and totally disabled, as defined by the individual state programs, or by Supplemental Security Income.
Undue Hardship Exception
There is a possibility to convince Medicaid that transfers made that resulted in a period of ineligibility would cause undue hardship on the applicant. Undue hardship is defined as depriving a person of medical care that endangers his or her life, according to federal laws. This means that you must prove that you cannot afford a nursing home without Medicaid, and without that nursing home, you might die. This is just an example, but each state has its own rules regarding hardship, so if you think that you or a family member may qualify for the exception, the nursing home can file a request for a waiver with the applicant’s consent.
If you or someone you love needs assistance with Elder Care law issues, call 856-281-3131. Let us help ease your stress and give you a plan.