Penalties for transfers of assets for new applications will be imposed. Example: Mom goes into the nursing home. She gives her son $20,000. She is only permitted to give away $1,200 during the calendar year plus the economic stimulus check she received in June 2020. We apply for Medicaid for her to start a penalty. She is determined to be eligible for Medicaid because her countable resources are below $2,000. However, Medicaid will not cover her room and board expenses for 2.6 months ($20,000 – $1,200 – $1,200 = $17,600 ÷ $6,681 = 2.63).
New application – a secondary transfer after the first penalty is in place cannot be processed. Example: Mom sells her home in the third month and gives her son the sales proceeds of $60,000. There is no new penalty because Mom has been approved for Medicaid, and she cannot be penalized until the Pandemic is over. No one knows what will happen then.
The new applicant will not have a monthly liability after the original penalty is served. Example: Mom has monthly income of $1,500. She will not be assessed a liability after her initial penalty is over so she can gift son $1,500 each month until the Pandemic is over.
Transfers from waiver to nursing home will not have a new liability assessed. Example: Mom is at home and applies for the Aged & Disabled Waiver. Her assets are under $2,000 except for her home. Her income is under $2,349 per month, so she does not have a waiver liability. She then goes into the nursing home. She will not have a liability at the nursing home since she did not have a liability when she was on the waiver program, and she cannot be treated differently than when she was at home. She can now gift her son her monthly income of $1,500. She can also sell her home. The proceeds are tax free since it is the sale of her personal residence and her gain is less than $250,000. She can then gift the $60,000 sales proceeds to her son as a tax free gift without a Medicaid penalty being imposed.
Benefits for those already receiving Medicaid cannot be closed except in the case of (1) a voluntary withdrawal; (2) the death of the recipient; or (3) the recipient is no longer an Indiana resident. These asset transfer rules will change at some time. We will update this article when these changes occur.
Respectfully submitted, Keith P. Huffman August 2020
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