What happens if you transfer assets before applying for Medicaid?

Due to the limitations Medicaid imposes upon an applicant’s assets and income, it might seem tempting to transfer some of your assets to another person prior to applying for Medicaid eligibility.

DO NOT DO THIS!

The above warning cannot be said enough. If you transfer assets to another person during Medicaid’s lookback period, you will run the risk of disqualifying yourself or your spouse for receiving Medicaid for the penalty period.

What is a look back period?

A look back period is a period of time in which courts, governmental agencies, or other legal entities examine, for a specified period of time, any and all asset transfers done in the past. Different fields of law apply different lookback periods. This becomes relevant in bankruptcy law for example. You cannot claim you are unable to pay your bills if you recently transferred all your assets to another person to avoid creditors.

Likewise, Medicaid has a lookback period. During this time period, you cannot have improperly transferred assets to another person without facing a Medicaid penalty being imposed.

What is the duration of Medicaid’s lookback period?

When applying for Medicaid, the state Medicaid agency will examine any asset transfers done during the last five years. The calculation of this five year lookback period depends upon the circumstances of a particular case.

Thus, if you transfer $100,000 to your parents in January 1, 2020, you cannot apply for Medicaid until 12:00AM on January 2, 2025.

What happens if you do transfer assets to another person during Medicaid’s lookback period?

If you do improperly transfer assets to another person during the lookback period, you will have a Medicaid penalty applied to your case.

What is a Medicaid penalty?

A Medicaid penalty is a value obtained by taking the amount you improperly transferred, and dividing it by the average cost of nursing home care in your given state. The resulting number determines the number of months that you will be prohibited from obtaining any Medicaid funds.

Example of the Medicaid penalty period

TO see an example of how the penalty period is calculated and the severe harm it can cause in your life, assume the following facts.

  1. You transfer $100,000 to your friend on January 1, 2020
  2. On January 1, 2022 you apply for Medicaid benefits
  3. The average monthly cost of nursing home care in your state is $5,000 a month.

$100,000 (divided by) $5,000 = 20 months of ineligibility

Thus, you will be unable to receive any assistance from Medicaid to pay for long-term nursing care for twenty months.

If you have transferred assets and you are concerned it might make you or a loved one ineligible to receive Medicaid benefits, all might not be lost. Contact our firm to find out methods of remedying improper transfers.

If you believe you might need Medicaid and wish to have assistance applying for benefits and insuring Medicaid eligibility, it is crucial you contact a qualified attorney immediately. Contact The Lockwood Legal Group for a free consultation today! You can call our office phone, cell phone, or send us an email.


 

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