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Can Making A Gift And Applying For Medicaid Save Assets?

Gifts Incur Penalties Which Will Result In The Person Not Being Able To Qualify For Medicaid.

The Gift Would Have To Be Done Five Years prior to entering a nursing home to Avoid Penalties.

Gifts that were made prior to a nursing home admission can in fact be penalized and they are subject to a five-year look back penalty period.

A gift that an individual made within five years prior to making a Medicaid application will incur a penalty period where the amount that was gifted will incur the appropriate penalty where a person will not be eligible for Medicaid and will have to private pay the nursing home.

For instance, the gift will be penalized if the nursing home cost $15,000 a month and the individual had made a gift of $15,000 in the previous month. If the gift was worth only $15,000, then there will be a one-month penalty where that person does not qualify for Medicaid so they will have to private pay for at least that one month before Medicaid would kick in again.

The federal government will not pay the tab for the nursing home, so the family members have to pay for that month. This would basically apply to any gift that was worth in excess of $1,000.

If the gift was worth less than $15,000, there is a partial penalty of less than a month if the average cost of the nursing home was $15,000 and obviously the penalty period would be increased if the gifts were larger than that. There is a two month penalty period if the gift was worth $30,000 and so on and so forth.

Proper Medicaid Planning Would Need To Be Done In Advance in Order To Protect Assets

Multiple rules and laws applying to gifting strategies should only be done with the advice and guidance of an elder law attorney, and such a plan should not be put off until such time when a person is actually on their way into the nursing home.

This means that in order to properly protect assets, their Medicaid planning needs to be done at least five years in advance of any nursing home care and that planning should be done by an elder law attorney.

There may be certain situations where the proper planning was not done in advance and a married person or a single individual needs nursing home care and they may be able to take advantage of certain exemptions under the Medicaid law.

Exempt Transfers for Married Couples and Other Possible Exemptions Under Medicaid law

A married couple is entitled to certain exemptions available under the law, which allows them to transfer all assets to the spouse who is not in the nursing home. This is only a valid option for married couples and is only a one time exemption; if the second spouse needs nursing home care or happens to pass away with assets other problems are created.

New York Attorney Michael Camporeale

Get your questions answered - call me for your free phone consultation (718) 475-9639

Therefore, taking advantage of these exemptions and other Medicaid law exemptions should only be done with an elder law attorney and should never be left to a nursing home employee or other non-elder law lawyer.

These exempt transfers between spouses or other exemptions under the Medicaid law can be a mind field if not done properly with the correct legal advice and could end up costing families hundreds of thousands of dollars.

What generally happens in these situations is that the individual can apply for Medicaid if they do what is called a spousal refusal and/or they make exempt transfers to their spouse. They would then be able to qualify and the nursing home would be paid by the Medicaid program.

Beware of The Human Resource Administration Recovery Unit

After about a year or so, if the assets of the community spouse are in excess of about $120,000, the human resource administration recovery unit can come back and seek reimbursement for that person’s spouse while they were in the nursing home AND WILL END UP SUING THE COMMUNITY SPOUSE FOR ALL THE MONEY MEDICIAD SPENT ON THAT PERSONS CARE. 

This is a big danger that happens all the time when nursing homes, for instance, file applications for married couples and the proper legal advice is not obtained from my office. The nursing home gets paid from Medicaid and they are happy but they fail to tell the community spouse what the ramifications are in regards to what may happens the following year When the HRA RECOVERY UNIT COMES AFTER THEM FOR THE MONEY THEY PAID THE NURSING HOME, or what will happen if they should pass away or become ill or how a lien will be placed on the family home or on the family’s estate.

As an experienced elder law attorney WE KNOW HOW TO TAKE ADVANTAGE OF THE EXEMPTIONS UNDER THE MEDICIAD LAW AND PROTECT YOUR ASSETS FROM THE HRA RECOVERY UNIT AVOIDING ANY LAWSUITS, LIENS, DEMANDS FOR MONEY AND RECOVERY AGAINST THE FAMILY’S ESATTE AFTER DEATH.We can get the person into the nursing home and accepted on the Medicaid program and then do the appropriate planning for the spouse who is in the community to protect them and their assets.

We will generally go ahead and move their assets into a Medicaid asset protection trust, so that Medicaid or HRA, the Human Resource Administration recovery unit can’t come back and seek contributions after the fact. At that point the community spouse’s assets would be already put into a Medicaid asset protection trust, so HRA would not necessarily be able to get recovery for anything.

How Transfers Would Be Handled For Unmarried Or Single People

If the person is a single individual then they will obviously not have the luxury of exempt transfers to a spouse. This means that if they have assets and they have to apply for Medicaid, then there will be a penalty period associated where they will have to spend down some of their assets, unless they are entitled to other exemptions under the Medicaid laws.This will require a very fact specific analysis by my office, this is why getting into a meeting with my office and getting the proper legal advice early is very important.Don’t accept what the nursing home tells you to do.

Sometimes depending upon the scenario and the facts I could protect all the family assets, or a crisis plan can be put in place for a single individual where a promissory note and gift plan can be put together. I can then protect or shield approximately 40% of the assets where there will be a certain penalty period where 60% of the assets would have to be spent down.

Spending 60% of the person’s assets though is still better than spending 100%, which ultimately would mean that 40% of the assets could be saved and then ultimately gifted to an individual such as a family member.

These exemptions, and legal strategies are very complicated and fact specific, and can only be done with the correct legal advice by a competent well versed elder law attorney and not by a non- elder law lawyer or nursing home.

For more information on Gifting Assets And Elder Law Planning, a free initial consultation is your next best step. Get the information and legal answers you’re seeking by calling (718) 475-9639 today.

New York Attorney Michael Camporeale

Get your questions answered - call me for your free phone consultation (718) 475-9639

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