Medicaid Look Back And Penalty - What Does It Mean?
I receive many questions about Medicaid, its look back period and the penalty. There is much confusion. The confusion is understandable given how complex the rules are.
Medicaid disqualifies applicants who intentionally transfer assets for less than fair market value to obtain Medicaid eligibility for long-term care coverage. By long-term care we mean nursing facility care or community based care waiver services. The word 'transfer' is broadly defined. It means: giving away property; disclaiming an inheritance; putting money in a trust; selling property for less than fair market value; and other actions. The penalty applies whether the transfer was by the applicant, the applicant's spouse or by a surrogate such as an agent under a power of attorney.
The 'look back' period is five years. The look back period commences when the applicant applies for Medicaid. If Medicaid finds that an uncompensated transfer occurred within five years prior to the date of application, a penalty period is imposed. In addition, the penalty is imposed only if the client is otherwise eligible for Medicaid but for the imposition of the penalty because of an asset transfer. In other words the penalty applies when the applicant meets Medicaid's income and resource requirements. The transfer of asset prohibition is harsh. It's designed to prevent someone from transferring some of their resources, applying for Medicaid and obtaining a penalty and then spending down their remaining resources until the penalty period has run. The penalty only applies when the applicant has no resources to pay for the nursing home.
The penalty period is calculated by dividing the uncompensated transfer by an amount the state deems the average monthly cost of nursing facility care. This figure is determined by the state. It can change from year to year. The result is a number of months of ineligibility. When imposing the penalty Medicaid does not take anyone's assets. It simply denies coverage and requires the applicant to reapply after the penalty period has run. The effect is to force the transferee to pay for the applicant's long-term care from the money they received.
Not all transfers are penalized. Transfers more than five years from the date of application are not penalized. Transfers made by the applicant to his or her spouse, to his or her child under 18 or to his or her disabled child of any age are exempt. Certain assets owned by the applicant are also exempt from the transfer of asset prohibition.
Medicaid eligibility is complex. Expertise is necessary to both avoid the penalty but also to take advantage of exempt transfers. If you would like to discuss Medicaid coverage in more detail please contact Edward Zetlin Law. We would be happy to discuss your situation.
Community Presentations in October for Ed Zetlin
- On October 7th at noon Ed Zetlin will present the following webinar through Fairfax County Aging Services: Legal Tools for Caregivers. As a family caregiver, you may need to make legal and heath care decisions for a loved one. Learn about legal tools that can help you ensure your loved one's wishes are carried out. Topics include durable power of attorney, trusts, guardianship, and advanced medical directives.
Join us for a webinar on Oct 07, 2015 at 12:00 PM EDT.
For more information contact Lucy Gerland at Lucy.Gerland@fairfaxcounty.gov