Real Estate

Debunking the Biggest Medicaid Myth: Asset Transfer

As an attorney, my clients often share rumors they hear circulating “on the streets” about all kinds of legal issues. I give them credit for bringing those rumors to me, because it gives me a chance to clear them up and it gives them a chance to get the right advice and do the right thing. Because my practice involves senior law, the most frequent rumors I hear involve Medicaid. They are also the most frustrating. I am amazed at the misinformation circulating so recklessly.

The biggest Medicaid buzz my clients have shared with me has to do with what to do if a parent suddenly becomes seriously ill, doesn’t have long-term care insurance, hasn’t done Medicaid advance planning, and needs Medicaid to pay for a home. permanent elderly. careful. More than one client has told me that friends and acquaintances have advised them to put all of their parents’ assets in their name because that way Medicaid will see that they have nothing and they will be able to qualify for Medicaid right away.


Not only is it wrong, but it is riddled with issues that could subject those in need and their families to sanctions, debarment, or worse, criminal charges.

Whether a sick senior will immediately qualify for Medicaid to pay for nursing home care depends on whether they did advance Medicaid planning or whether their current financial status qualifies them from the start. The truly indigent should have no problem qualifying. It’s the lower middle class, those with modest assets who are trying not to lose out altogether, especially if they have a healthy spouse or children, who face a more challenging task to qualify.

Congress has created methods by which those who are not indigent but not wealthy can attempt to protect some or all of their assets in order to qualify. In the best case scenario, someone who plans ahead can create a trust that qualifies for Medicaid, transfer all their assets to the trust, and wait out the five-year “look-back” period. When the person can show that they have had no assets for at least five years (because the trustee of the trust owns their property and the Medicaid applicant cannot be the trustee), they must qualify for Medicaid.

It’s in the worst case scenario, when an older person can’t plan at all, or what we in the industry call “the Medicaid crisis case,” that problems arise. And this is where those rumors abound. Because Medicaid looks back five years into a person’s financial history to determine what they own and where it went, any transfer of their assets to someone else’s name without adequate compensation for the transfer will give the Medicaid applicant a period of penalty, which means they will not qualify for coverage for a certain period of time, based on a set formula.

Tea worst What a child may do is transfer their parent’s assets out of the parent’s name thinking Medicaid won’t know, or fail to report all assets thinking Medicaid won’t find them, which is tantamount to defrauding Medicaid and could subject that person to criminal proceedings. loads (Different rules apply to spouses). The fact is that Medicaid does a thorough review of each applicant’s financial background, references and cross-checks, verification of all financial transactions, bank accounts and other assets, and will determine if the money has been transferred. . By the time they find out, it will be too late for the senior to do anything to reverse those transfers and they will be disqualified from receiving Medicaid benefits for at least a period of time.

Congress has authorized various methods by which even “crisis” cases can protect some of your assets. Some examples include purchasing an irrevocable burial trust, investing in certain home improvements, giving gifts of rebate promissory notes, and entering into personal service contracts with family members. The only way to know if you or your loved one can protect some or all of your assets is to consult a senior citizen attorney who specializes in Medicaid planning.

As my father used to say: “Believe half of what you see and none of what you hear.” This is a good policy when it comes to Medicaid rumors. Get the right advice so you can get the best for your loved ones.

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