When applying for Medicaid nursing home coverage, applicants must meet certain financial requirements. In order to prevent fraud, Medicaid not only looks at an applicant’s current financial situation, but they also look back at the applicant’s financial transactions over the previous five years. Medicaid specifically adds back any below market transfers and adds them back to the applicant’s current financial state to see if they still meet the very restrictive asset limits for Medicaid eligibility.
A below market transfer is any transfer out of a person’s name where less than full market value was received in return.
If an applicant is over the asset limit, then the applicant will have to pay for nursing home coverage themselves until they fall back below the asset limit. As may be obvious, if a person is over the asset limit due to an amount added back from previous transfers, then they can face severe financial strain since they have to essentially pay for nursing home coverage with money they no longer have.
A common concern people have when learning of the look back period is how the look back period applies to gifts and charitable donations.
The good news is that there is an exception for transfers that were not made for the purposes of becoming eligible for Medicaid nursing home coverage. What this means is that the applicant would have made those transfers even if they were not going to apply for Medicaid.
The bad news is that it is up to the applicant to prove that these transfers would have been made anyway. An applicant has to show that they were regularly making gifts and donations well before the five year look back period. The applicant must also show that the amount gifted is in line with what was happening before the look back period. Any sudden increase in the amounts gifted may render those transactions ineligible for the exemption. Even preplanned, one-time gifts, such as a wedding gift or paying for a relative’s tuition may not fall within the exemption if the applicant cannot prove that the gift was planned before considering applying for Medicaid.
The restrictiveness of this exemption highlights the importance of working with an experienced elder law attorney before applying for Medicaid nursing home coverage. An elder law attorney can work with an applicant to make sure that an applicant has the proper documentation to minimize an applicant’s out-of-pocket expenses for nursing home coverage.
An elder law attorney can also work with clients to develop plans to legally protect assets while still allowing for Medicaid nursing home coverage. The further in advance planning begins, the more effective asset protection plans will be. Even if the need for nursing home coverage is imminent, meeting with an elder law attorney can still save individuals from making costly, unnecessary mistakes when applying for Medicaid nursing home coverage.
To discuss planning for your potential Medicaid nursing home application, please call Martha C. Brown & Associates at (314) 962-0186.