Transfer of assets was not made for Medicaid purposes

The cost of nursing home and home care can be prohibitive for people who do not have long-term care insurance. Often, Medicaid purposes is the only viable option. When applying for nursing home Medicaid, the Medicaid agency will review the applicant’s (and spouse’s) financial history for the five years prior to the requested beginning date of Medicaid. If the applicant or his/her spouse has transferred assets within the five year period, Medicaid purposes that the transfers were made for the purpose of qualifying for Medicaid. As such, Medicaid imposes a period of ineligibility (“penalty period”) based upon those transfers, unless they were made to a spouse or to a blind or disabled child. The penalty period is determined by dividing the amount transferred by what Medicaid deems is the monthly cost of care in the region in question ($12,319 for New York City). For example, if $123,190 was transferred, Medicaid would impose a 10-month penalty period.

However, if an individual is applying for nursing home Medicaid and had transferred assets within the five years for reasons other than Medicaid planning, he or she may rebut the presumption in order to avoid a period of ineligibility. The individual needs to prove that the transfers were made for a reason other than to qualify for Medicaid. The following evidence can be used in the scenarios below to prove the assertion that the transfer was not made for Medicaid purposes:

  1. The individual (and his/her spouse, if married) was in good health at the time of the transfer and made the gift for a particular reason, not anticipating the need for long-term care. One example would be parents paying for a child’s wedding. Medical documentation would need to be provided to verify this assertion.
  2. The individual had a pattern of gift giving. For example, if she had a history of helping children or grandchildren by making annual gifts, she would need to provide copies of checks and statements, with explanations as to the nature of the gifts and to whom they were made.
  3. The individual had a significant amount of other assets at the time of the transfers. In other words, if significant assets remained in his name after the transfers were made, it indicates that the individual was not trying to render himself “insolvent” so that he would be eligible for Medicaid. He would need to provide statements showing that he had other assets in his name after he made the gifts.
  4. The individual was in good health and was engaging in estate planning based upon the advice of an accountant or estate planning attorney. In addition to providing medical evidence, one would need to provide the estate planning documents and the verification of the advice that the attorney gave and the nature and reason for that advice.

Proving that an individual and his/her spouse made a transfer for purposes other than qualifying for Medicaid can be quite difficult. If you or your spouse did, in fact, make gifts in the past and you now require long-term care, you should consult with an experienced elder law attorney.

Written by Ronald A. Fatoullah, Esq, principal of Ronald Fatoullah & Associates, a New York law firm that concentrates in elder law, estate planning, Medicaid planning, guardianships, estate administration, trusts, wills, and real estate. Attorney Fatoullah is a Member of the National ElderCare Matters Alliance,  and he and his firm are Featured Members of ElderCareMatters.com – America’s National Directory of Elder Care / Senior Care Resources for families.

Transfer of assets was not made for Medicaid purposes was last modified: March 24th, 2023 by Ronald Fatoullah, Esq.