Medicaid Information & Referral Medicaid Information & Referral Medicaid Information & Referral Medicaid Information & Referral Medicaid Information & Referral texas medicaid information
Medicaid Information & Referral Medicaid Information & Referral Medicaid Information & Referral Medicaid Information & Referral Medicaid Information & Referral texas medicaid information
Medicaid Information & Referral Medicaid Information & Referral Medicaid Information & Referral Medicaid Information & Referral Medicaid Information & Referral texas medicaid information
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Some Rules on Transfers of Assets 

Occasionally, when applicants are over the stated asset limits they are tempted to gift out the “excess” assets prior to applying for Medicaid.  While gifting can be done, any gifts will create a penalty period during which time the applicant is ineligible for Medicaid. Medicaid defines the term Uncompensated Transfer (gift) to be the transfer of any asset for less than fair market value. Therefore, a father couldn’t sell a brand new car to his son for $1 and be considered a valid sale.  Since the transfer was made at less than the fair market value for the car, a penalty would be assessed. 

In the application process, it is asked if the applicant had given away any assets in the last 60 month period.  This is referred to as the “Look Back Period”.   If there were no gifts or uncompensated transfers made in the last 60 months, then the person is eligible for Medicaid provided they meet the other requirements. 

If the applicant had made gifts during the last 60 months, the Medicaid worker asks for the date and the amount of the gift.  The value of the gift determines the number of months that the transfer will affect eligibility. The gift value is divided by a statewide, daily nursing home cost, currently $142.92. That quotient is rounded down to the nearest whole number to determine the number of days of ineligibility resulting from the gift. For example:  John gifts $10,000 to his son.  $10,000 divided by $142.92 is 69.96, so the penalty period is 69 days. (NOTE: A penalty is not assessed in a month when the total amount of transfers, or gifts, total less than $200.00 for that month)

The start of the penalty period begins when an applicant is "otherwise eligible" for benefits meaning the Medicaid office must review an application submitted for the applicant and determine that he or she has met every Medicaid eligibility requirement other than the requirements concerning gifts. Once that requirement has been met, the 69 day penalty period begins. In the above example: John's gift might have been to attempt to gift the $10,000 out of his name to preserve the assets and qualify for benefits. However, he must submit a Medicaid application and disclose the gift. If he is otherwise eligible for benefits (which includes having a limited amount of assets), then the state will begin the 69 day penalty period. With only a limited amount of assets, John will not be able to pay for his nursing home care for 69 days, so the son must spend the $10,000 on nursing home care. The total savings is zero.

Our office utilizes legitimate and proper transfers to reduce the size of a Medicaid Estate and to preserve at least a portion of the nursing home resident's assets. Some of these strategies involve establishing certain trusts and gifting programs. These strategies have proven crucial in preserving hundreds of thousand of dollars. When an applicant is already in a nursing facility like in the example above, a typical amount that could be preserved would be approximately 60% of the total assets. If your estate is worth $100,000, you could save around $60,000 in a typical case. Of course, if you are not yet in a facility, then the savings could be even more.

MIR, Inc. works under the direction of attorneys.  However, information on this website is not a substitute for the advice of an attorney.

Medicaid Information & Referral

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3605 NE Loop 286, Ste 2000, Paris, TX 75460
Toll Free: 800-259-9674 | Paris Area: 903-784-2857
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