We all would like to think that Medicaid will be there for us without question if we happen to need it later on in life. However, there is something called a Medicaid Look Back period that can potentially affect your eligibility to receive Medicaid benefits.
What this means is that you cannot transfer any assets to any person, be they family members, loved ones, friends, or even any charitable organizations within five years of applying to receive benefits from Medicaid. This is what is known as the Look Back period mentioned above. New Jersey doesn’t want its citizens to have to move into a nursing home when you’ve given all your money to your family, children, or anyone else, and then qualify for Medicaid shortly thereafter. To make sure it doesn’t happen, Medicaid has instituted a penalty period—a length of time in which someone who transfers any assets will be rendered ineligible to receive benefits.
Let’s see an example:
The average cost of care per month in New Jersey is $9,369 (or more). So, if you give away property that has a worth of $100,000, you will then be ineligible for Medicaid for 10 months (as $100,000 divided by $9,369 =10.67 months).
Someone applying for Medicaid has to disclose any and all of his or her financials (both income and expenses) within five years of filing the application, again referring to the Look Back period. The Board of Social Services will then determine whether or not the applicant has transferred any assets for less than fair market value.
However, not all transfers will be penalized. If you transfer assets to any of the following, you will be exempt from ineligibility:
- A spouse
- A blind or disabled child
- A trust for the benefit of the blind or disabled child under the age of 65 (even if said trust is to benefit the Medicaid applicant, under specific circumstances).
What’s more, there are special exemptions that apply to transferring a home. You can transfer your home without incurring penalty to the following:
- The applicant’s spouse
- A child under the age of 21 who is also blind or otherwise disabled
- A trust for the sole benefit of the blind or disabled child under the age of 65 (even if said trust is to benefit the Medicaid applicant, under specific circumstances)
- A sibling who lived in the home during the year before the applicant’s institutionalization who already has equity interest in the home.
- A “caretaker child,” one who is defined as a child of the Medicaid applicant who lived in the house for a minimum of 2 years before the applicant was institutionalized and who cared for the applicant so he or she could stay out of a nursing home.
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.