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Penalized Transfers under Medicaid

April 13, 2006

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Because of complex Medicaid rules, you should seek legal advice before you make any transfer of assets. A transfer that is not exempt makes the applicant ineligible for Medicaid for a certain period of time.

A transfer is not exempt based on the timing of the transfer and the nature of what was transferred.

The calculation of the ineligibility period is complicated. However, basically, the period of ineligibility is equal to the time period the nursing home costs would have been paid for, had the transfer not been made.

For example, assume a home with a value of $144,000 is transferred as a gift (with no value received in return) in a way that is not exempt. The applicant would be ineligible for Medicaid for a period of two years from the date of the transfer, assuming the average cost of a nursing home in that state was $6,000 per month ($144,000 divided by $6,000, the assumed average monthly cost of a nursing home, yielding 24 months, or two years of ineligibility).

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