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Nursing Home Medicaid

What You Need to Know About Florida Medicaid Eligibility

Gifting, Asset Transfers, and the Look-Back Period with regards to Nursing Home Medicaid Qualification, Nursing Home Medicaid Filing and Estate Planning

Written By: Brandon - May• 19•12

Nursing Home Medicaid
I briefly touched on this subject in another article entitled “Eligibility and Application for Nursing Home Medicaid Qualification.” If you make a gift and/or transfer assets you may be ineligible to receive nursing home Medicaid benefits during what is known as the “penalty period.” Unfortunately, even if you are in a nursing home Medicaid qualified state and eligible to receive benefits, you will be disqualified from receiving said benefits as long as you are within the “penalty period.”

In order to calculate the penalty period with regards to your nursing home Medicaid qualification eligibility, we first need to look at the amount of the gift/transfer of assets. Clearly, the more value the gift has, the longer the penalty period will be. The next step we take is to look at the value of the gifted asset(s) and use a divisor. Currently, in the state of Florida, that divisor is $5,000.00. Therefore, if you were to gift your daughter $100,000.00, you would take the $100,000.00 and divide that by $5,000.00 to give you a figure of 20. What this means is that this gift would make the individual seeking nursing home Medicaid eligibility deemed disqualified for a period of 20 months!

Let me also explain a few miscellaneous rules regarding gifting and nursing home Medicaid / ICP Medicaid filing. The penalty period to be put into effect is determined by the total amount of all gifts and/or transferred assets during the look-back period (currently 5 years in the State of Florida). As a result, it makes no difference, for nursing home Medicaid eligibility purposes, whether the gift was made to one daughter or three daughters, two sons, and four grandchildren. We look to the TOTAL amount of all transferred assets and use the calculation as listed above. Additionally, it is important to note that this applies even for married individuals. So, whether the gift is made by the individual who needs nursing home Medicaid approval or made by the individuals’ spouse, the end result is the same. Moreover, the time limit on the length of the penalty period for nursing home Medicaid eligibility has no limit. Therefore, if you gift $500,000.00 to your child you would have a nursing home Medicaid disqualification period of 100 months ($500,000.00 divided by $5,000.00 = 100). Keep in mind, when we talk about gifting, we are focusing on the transfer of assets for less than fair market value. One final note before we move on, if you are married, any transfer of assets between husband and wife is not considered a gift and will not trigger a look-back period. Therefore, any transfers of this sort will not affect nursing home Medicaid eligibility or incur any period of disqualification.

Let’s shift gears and discuss when the penalty/disqualification period begins with regards to nursing home Medicaid qualification. The penalty start date is the date the nursing home Medicaid applicant makes application and would have been eligible to receive nursing home Medicaid benefits but for the imposition of the gift penalty. In Florida, before November 1, 2007, gifting was charged from the date of the gift. The gift would disqualify the nursing home Medicaid applicant from the time the gift was given using the $5,000.00 divisor.

Example: Mom gifted $100,000.00 to son before November 1, 2007. Mom would then be disqualified for nursing home Medicaid benefits for 20 months ($100,000.00/$5,000.00) from the date of the gift! As a result, if Mom gifted this money 2 years (24 months) before she needed to apply for nursing home Medicaid qualification, the disqualification period would have expired and she would be nursing home Medicaid eligible (assuming she is in a nursing home Medicaid qualified state).

However, after November 1, 2007, the law changed
. Gifting with regards to nursing home Medicaid eligibility still disqualifies the individual by the same divisor ($5,000.00), but now it commences at the date of application for nursing home Medicaid eligibility.

Example: Three years ago Mom gifted $100,000.00 to son and now Mom needs to engage in the nursing home Medicaid qualification process and application. Mom applies for Medicaid and, unfortunately, she now will be disqualified for 20 months from the date of application for nursing home Medicaid. 20 months during a time period when Mom actually needs nursing home Medicaid!!

Remember, the rule for purposes of nursing home Medicaid is that the value of the gift is its fair market value. Let’s say Mom decides she is going to sell her home that is worth a fair market value of $350,000.00 to Son for $15,000.00. The amount of money received from Son ($15,000.00) will be subtracted from the fair market value of the transferred asset (the home). This calculation then determines the value of the gift and, therefore, the length of the exclusion period. So, $350,000.00 minus $15,000.00 is $335,000.00 that will be considered a gift. Taking this one step further to put into terms of nursing home Medicaid qualification, $335,000.00 divided by our divisor of $5,000.00 = 67 months of disqualification.
Though this may seem like a lot of information; gifting, disqualification periods, and look-back periods when determining nursing home Medicaid eligibility and estate planning is actually much more complex. This article is meant to serve as a primer for this area of nursing home Medicaid application rules and regulations. In reality, this article could be significantly more intricate and contain many more nuances regarding gifting and its relation to nursing home / ICP Medicaid eligibility. Please consult our nursing home Medicaid specialists at Elder Planning Alliance to discuss these intricacies. We have helped hundreds of families in situations exactly like yours and have saved many families from seemingly irreparable gifting and nursing home Medicaid disqualification nightmares. Please do not hesitate to call our specialists, toll free, at 1.866.372.2702 for your free initial consultation

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