Useful Information About Funeral-Related Matters
When Transfers of Assets Result in a Period of Ineligibility for Medicaid
Applicants for Medicaid for institutional care who transfer assets are not eligible for Medicaid for institutional care for the following period of time:
- All uncompensated transfers made within the look-back period are added together.
- The total amount is divided by the monthly cost of nursing facility services in the state determined as of the date of the application for benefits, not on the date(s) of the transfer.
- Under DRA, the penalty period commences on the later of (1) the month following the month in which the transfer is made (existing law) or (2) the date on which an individual is both receiving nursing home care and whose application for Medicaid benefits would be approved but for the imposition of a penalty period at that time. To start the penalty period, the individual must be “otherwise eligible” for Medicaid.
- There is no cap in time on the period of ineligibility.
- In the case of jointly owned assets, any action by the Medicaid applicant or by any other person that reduces or eliminates such individual’s ownership or control of such asset (or the affected portion of the asset) shall be considered a transfer.
- There will be a penalty period imposed for an institutionalized spouse when his/her spouse transfers any assets for less than fair market value within the look-back period, however, after the month in which the institutionalized spouse has been determined eligible for Medicaid, no assets of the community spouse are considered available to the institutionalized spouse. Therefore, a transfer by the community spouse after the month in which eligibility is established does not result in a penalty period for the institutionalized spouse.
Exceptions to the Transfer of Assets Rule
When a Transfer will not result in a period of ineligibility
- If a satisfactory showing is made to the state that the institutionalized individual intended to dispose of assets for “fair market value” or for other valuable consideration.
- If the individual makes a satisfactory showing that the assets were transferred exclusively for a purpose other than to qualify for Medicaid.
- If the assets were transferred to an individual’s child who is blind or permanently and totally disabled or to a trust established solely for the benefit of such child.
- If the individual makes a satisfactory showing that all assets transferred for less than fair market value have been returned to the individual.
- If the assets were transferred to or for the sole benefit of the community spouse, or to another for the sole benefit of the community spouse, and also transfers from the community spouse to another for the sole benefit of the community spouse.
- If all assets were transferred to a trust established solely for an individual under 65 years of age who is disabled.
- If the state determines that a denial of eligibility would result in “undue hardship”.
- If a Medicaid applicant purchases a life estate in a home and resides in the home for at least one year after said purchase.
- The asset qualified as a homestead and was transferred to any of the following individuals:
- A spouse
- A minor child under age 21 or a blind or disabled child of any age.
- To a sibling of the individual who has an equity interest in the home and was residing in the home for at least one year immediately before the date of institutionalization. Equity interest means that an individual has invested money in the property or has the right to use the property without necessarily having title to the property.
- To an adult, non-disabled son or daughter who was residing in the home for at least two years immediately before the date of institutionalization and who has, as determined by the State provided care to the individual which permitted him or her to reside at home.