• Elder care ma be affected by the transfer of assets.elderly lady image by pixelcarpenter from Fotolia.com
  
  Medicaid is a federal and state funded program that provides health insurance for low-income children, seniors and disabled individuals. The program also covers nursing home benefits for those who fall within the guidelines. Due to federal funding, the program has several mandatory rules that apply to every state. However, because each state runs its own program, other eligibility rules may vary.
  
  

Centers for Medicare and Medicaid Services (CMS)

• On February 8, 2006, President George Bush signed the Deficit Reduction Act of 2005 (DRA) The signing of this act changed the rules of Medicaid eligibility, which included extending the look-back period and transfer penalty start date for asset transfers. If an individual applied before the signing of the DRA, Medicaid is allowed to look-back 36 months to determine whether a transfer of assets took place; after the signing of the DRA, the period is extended to 60 months. This means if any transfer of assets for lesser than the fair market value took place, the state is required to withhold nursing home care payments for a period of time referred to as the penalty period.
  
  

Transfer Penalty Period

• The transfer of penalty period is figured by dividing the value of transferred asset by the average monthly cost of nursing home care. For example, if the value of the transferred asset is $100,000 and the average monthly cost of care is $4000. The penalty period is 25 months ($100,000/$4000=25). There is no limit to the ineligibility period.
  
  

Exceptions

• A penalty period is not incurred if the (A) transfer is to a spouse or third party for the benefit of the spouse, (B) transfer is by a spouse to a third party for the benefit of the spouse, (C) transfer is to certain disabled individuals or trusts established for those individuals, (D) transfer is for other reasons rather than to qualify for Medicaid; or (E) transfer would impose undue hardship. For example, an asset transferred to a disabled child under 21 would not incur a penalty period.