Medicaid Eligibility and Improper Transfers

Today we are talking about Medicaid Eligibility and Improper Transfers and long-term care planning.  Is Medicaid a state-federal funded program?  Are you eligible for Medicaid?  What is an Improper Transfer?

What if you are a single person who requires Medicaid?

If you are a single person, to be eligible for Medicaid, you can only have $2,000 in countable assets.  And yes, Medicaid is a state-federal funded program.

What are Countable Assets?

Countable Assets is a bank account. This is any financial account, stocks, bonds, mutual funds, IRAs, or life insurance policy that has a face value or a cash surrender value and can only have a cash value of $2,000.

What if you are a married couple?  Can you get Medicaid?

If you are a married couple, the rules are a little bit different because they look at you as a community spouse who's going to remain in the house and an institutionalized spouse.  But the general focus is on a single individual.

What if you have a lot of money and you're in what we call the “Medicaid spin-down period” where you must spend all of your assets?  How does Medicaid determine whether or not a transfer was proper or improper?

The first thing they do is look at whether or not you as the gifter or the person who made a gift or transfer received fair market value in exchange.

Example 1:  A client wants to give their house to their children.

If you take a $500,000 or even a $250,000 house and transfer it to your children, Medicaid wants to see that you receive fair market value in exchange for that.

If the house is worth $250,000, and your children only pay you $50,000, there's $200,000 of the improper transfer.

As stated in another video, currently, as of the date of that video, the penalty period is $7,453 per equals one month.

At $200,000, 26.83 months (let us call it 27 months) you would be ineligible to qualify for Medicaid if you made an improper transfer.

Now, Medicaid and the Department of Job and Family Services have the authority to require you to produce documentation to show or prove that the transfer was not improper.

Example 2:  A client whose grandma had made a bunch of checks to cash and then she went to qualify for Medicaid.

The biggest issue that the Department of Jobs and Family Services had was they were not able to prove that fair market value was provided in exchange for the checks to cash, so they couldn't produce a paper trail.

As a result, there was a penalty period because of the improper transfers.

Contact Littlejohn Law with questions and concerns.

We at Littlejohn Law, are here to listen to your concerns and questions.  If you're concerned that one of the transfers you're going to make is going to be an improper transfer, give us a call at 740-346-2899 so that we can help you make a well-informed decision and that we can put together a comprehensive estate plan to protect your assets.

Littlejohn Law, LLC
The Real Estate and Probate Law Firm
352 Main Street
Wintersville, OH  43953

See videos for more information and references:

“And remember, where there's a Will, there's a way, and where there's no Will, then there's probate”


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