I’ve read about Medicaid’s 36 mo look back period for transferring assets to children before entering a nursing home. But I heard something new a few minutes ago from my mother’s old banker in Texas.

She said that spending down assets at a rate less than approximately $5600 per month before the application to Medicaid does not trigger a penalty for eligibility like a large transfer of say $100k would.

Can that amount be legally transferred to my mothers children, protecting it from nursing home costs even though it’s not in exchange for services at fair market value?

I don’t know where to confirm this. I can google “Medicaid and lookback” and find all sorts of information on that, but don’t know where to begin with confirming the allowed spend down rate.

Thanks for your help.

Bill in Key Largo

Bill, each state has a different way of calculating the penalty for transfers. In Florida, the state uses a divisor of $3,300. Take the amount of assets transferred and divide by 3,300 to get the number of months you are ineligible. Therefore a transfer of $3,300 disqualifies you for one month. You may be able to transfer more as part of a programmed transfer strategy ($6,000 for example) but such a method should only be undertaken with the supervision of an elder law attorney because there are multiple pit falls and bad endings if it is not done correctly. I will on occasion use such a transfer strategy, but often resort to more expeditious techniques in light of time constraints. Please contact me if I can be of any further assistance.

Sean:

Here's a scenario/question for FL residents: A husband may apply for medicade within the next 3 to 5 years. The younger wife will likely not need to apply for some 8 to 10 years, if at all. The wife/communal spouse has assets less than the current $99,540. Would her transferring/gifting those assets place husband's eligibility for medicade at risk? Assuming annual gift-tax rules were accommodated, would it make a difference weather it was a lump-sum or more gradual transfer?

With regards to FL and the new 5 year look back, transfers are calculated cumulatively?


With great appreciation for your help,
Matt

My thoughts are to not make any gifts or transfers until we have a better idea how the new rules will shake out. While you predict she will not need benefits, you cannot be sure. If the total assets are less than the required amount then generally transfers will not disqualify the applicant. But because of proof problems regarding establishing the amount of the assets at the time of the gift, it is still my reccomendation NOT to make any transfers. This all, however, goes without saying that the funds can me moved by other methods that would not disqualify either spouse.

UPDATE! Medicaid rules regarding transfers are set to change November 1, 2007. All penalties will now be prospective and enforced from the date of entry into the nursing home. Even small transfers can create problems.

Sean.