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Medicaid rules on asset transfers prior to nursing home coverage

Medicaid Coverage of Nursing Home Care: Page 4

By , Caring.com Expert
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5-year Medicaid look-back period for asset transfers prior to nursing home coverage

When someone applies for Medicaid coverage of nursing home care, Medicaid examines that person's assets to see if he or she falls below the Medicaid eligibility limit. But Medicaid doesn't simply look at what those assets are at the time of applying. Instead, Medicaid examines the applicant's financial records during the previous five years. If, within that time, the applicant has made a gift of funds or other assets to anyone, that gift will result in a delay of eligibility. The same is true of any asset transferred or sold for less than fair market value -- selling a car worth $20,000 to a grandchild for $5,000, for example.

If Medicaid determines that an applicant for Medicaid nursing home coverage has made an invalid asset transfer, the resulting delay is equal to the amount of the transfer divided by the average monthly nursing home cost in the state. For example, if the amount invalidly transferred was $25,000 and the average monthly nursing home cost in the state is $5,000, Medicaid eligibility would be delayed for five months ($25,000 divided by $5,000 = 5). The coverage delay begins from the date of the application for Medicaid.

Permissible asset transfers under Medicaid nursing home coverage rules

Some gifts or transfers within the five-year period prior to an application for Medicaid nursing home coverage are considered valid and don't result in any coverage delay.

Unmarried person. An unmarried person who applies for Medicaid coverage of nursing home costs can transfer the following assets without any penalty:

  • Home to a child. An unmarried Medicaid applicant can transfer title of his or her home to an adult child who's lived in the home for two years prior to the applicant entering a nursing home, during which time the adult child provided care that permitted the applicant/parent to live at home instead of entering a nursing home.

  • Home to a sibling. An unmarried Medicaid applicant can transfer full title of his or her home to a brother or sister who already has an ownership interest in the home and has lived there for at least the year prior to the Medicaid application.

  • Other exempt assets. An unmarried Medicaid applicant can transfer any other exempt asset -- such as a car or personal and household belongings -- to anyone.

  • Any asset to a blind, disabled, or minor child. An unmarried Medicaid applicant can transfer any asset, including a home, to a blind, disabled, or minor child.

Married person. A married person who applies for Medicaid coverage of nursing home costs can transfer the following assets without any penalty:

  • Home. A married Medicaid applicant can transfer home title to his or her spouse who remains living in the home (the "community spouse"). The community spouse can then, if he or she wants to, transfer title to an adult child or someone else. This double transfer takes the house out of the nursing home resident's estate and therefore is beyond the reach of Medicaid reimbursement when the community spouse dies.

  • Other exempt assets. A married Medicaid applicant can transfer any other exempt asset -- such as a car or personal and household belongings -- to anyone.

  • Any asset to a blind, disabled, or minor child. An unmarried Medicaid applicant can transfer any asset, including a home, to a blind, disabled, or minor child.