Full question:
We are thinking of putting our estate in our children's names or in irrevocable trusts to make us Medicaid eligible if entered into a nursing home Please advise as to steps we should take. Information required on forms necessary to make our estates eligible for Medicaid assistance if nursing home care is deemed necessary in the future.
- Category: Medicaid
- Date:
- State: New York
Answer:
To qualify for Medicaid nursing home assistance, be aware of the 60-month look-back period. This means Medicaid will review any asset transfers made for less than fair market value within the past five years. Under the Deficit Reduction Act of 2005, this look-back period is now five years instead of three for transfers made after February 8, 2006.
If you transfer or sell assets for less than their fair market value, it is considered a "disposal of resources." For every $4,300 disposed of, you may face a one-month disqualification from Medicaid coverage for nursing home care.
The penalty period begins on the later of the first day of the month after the transfer or the date you become eligible for Medicaid long-term care. If you make multiple transfers, the second penalty starts only after the first one ends.
Some transfers do not affect Medicaid eligibility, including transfers to:
- A spouse
- A child under twenty-one or a child who is certified blind or disabled
- A sibling with an equity interest in the home who has lived there for at least one year before the institutionalization
- A caretaker child who has lived in the home for at least two years prior to institutionalization and provided care
If your equity interest in the home is $500,000 or less (or $750,000 in some cases) and you intend to return home, it won't count as a resource for Medicaid eligibility. The equity is calculated by subtracting any liens or mortgages from the home's fair market value.
Creating a life estate without the power to sell may disqualify you from Medicaid. However, if you created a life estate deed long ago with no penalty, it may not disqualify you, as its market value would be $0.
On the other hand, a life estate deed with the power to sell is not considered a disposal, but the home's market value will still count as a resource unless exempt for other reasons, such as a spouse or dependent relative living there.
Be cautious of fraudulent conveyances, which can occur if you transfer assets with the intent to defraud creditors or without receiving equivalent value in return. This is defined under the Uniform Fraudulent Transfer Act.
For further assistance, consider consulting with a legal professional who specializes in Medicaid planning.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.