There is a period of non-eligibility for Medicaid for those who have recently transferred assets. The DRA was enacted in 2006. For transfers that were made prior to the enactment, Medicaid officials will only look at any transfers that were made within 36 months of the Medicaid application. If transfers were made after the enactment of the DRA, there is a look-back period of 60 months. This period determines how long you must wait to become eligible for Medicaid after the transfer was made. The formula is based on the amount that was transferred. It takes the total amount transferred and divides it by the average monthly cost of nursing care. For example, if $100,000 was transferred and the nursing costs are $5,000 per month, the waiting period, or penalty period would be 20 months. There is another rule that is involved with the look-back period. The penalty period will not begin until the individual has moved to the nursing home, has spent down their assets to be eligible for Medicaid, has applied for coverage and has been approved for the coverage but not for the transfer.

When making transfers, it is very important to be aware of these rules and time frames. This information will help you better plan your Medicaid asset protection. Make sure that all transfers are done prior to the time of needing nursing care. It is suggested that if you are considering transferring your assets, you do so as soon as possible. This will eliminate any waiting when Medicaid coverage is needed. If transfers are made within the five year look-back period, the penalty time could actually extend past five years. This will depend on the amount of assets that were transferred.

There are many factors to consider when making transfers. You should take into consideration the estimated cost of nursing care you will need, the transfer penalty in the state in which you reside, your current and projected income and other living expenses. The main goal of the DRA was to try to eliminate any planning. The best solution is to contact an elder law expert or contact us UltraTrust.com (Estate Street Partners) to assist you with Medicaid planning and asset protection transfers.

You should also be aware that transfers could have tax consequences if not done correctly. If you transfer the assets to your children, they will be responsible for all taxes. If the value of the asset appreciates, there could be serious consequences. Your children will not receive the tax break that they would if they had received the assets through your estate. This is another reason why it is so important to carefully plan any transfers.

Another common concern is how to handle owning a home. It is possible for an individual to be in a nursing home, receive Medicaid and still own a home. However, it is much easier to transfer the home to a spouse that will not be in the nursing home or even better, an irrevocable trust. Transferring it to a spouse allows the spouse to have complete control over the asset and will allow him or her to sell the property after Medicaid has been approved for the other spouse. At this point, it is wise for the spouse to change their will, removing the nursing home spouse. This will protect the assets. Otherwise, if the spouse dies, all of the assets will go to the spouse in the nursing home. This may affect Medicaid eligibility and will force a spend-down of assets to maintain Medicaid benefits. Contact us at UltraTrust.com for further expert advice and consultation on these matters.

There are certain transfers that are exempt from the look-back period. After going into a nursing home, it is possible to transfer assets to your spouse, a child who is disabled or into a trust for the benefit of someone under the age of 65 with a permanent disability. You may also transfer your home to children under the age of 21, to a child that resided in the home for two years prior to you being placed in a nursing home or a sibling that has an equity interest in the home. The sibling must have lived in the home for one year prior to you entering the nursing home. These types of transfers are allowed and there will be no penalty regarding Medicaid eligibility.

If you have any concerns about how to transfer assets or if a transfer is your best option, contact an asset protection expert or contact us Ultratrust.com (Estate Street Partners). They will have all the information you will need to make an informed decision. Keep in mind that transferring assets sometimes means you lose control of those assets. In rare cases, it is better to spend your own savings and wait to apply for Medicaid benefits until the transfers are all in place. Again please consult an expert.