Medicaid Exemptions for Transfers of Assets

Are there Medicaid Exemptions for Transfers of Assets?

Under Medicaid, any transfer of assets within the past five years may trigger a Medicaid penalty. However, for most rules, there are also exceptions. Medicaid allows transfers in certain circumstances. If a transfer meets one of these exceptions, the transfer would not affect the Medicaid eligibility of the applicant.

What are permissible transfers?

There are a number of permitted transfers that one can make which would shield an individual from a potential Medicaid penalty and the recapture of assets by Medicaid.

Acceptable transfers include any transfers to a spouse, a child under age 21, or a child who is blind or totally and permanently disabled. Between siblings, a transfer of a home may be made to a brother or sister, so long as he or she already had an equity interest in the home prior to the transfer and who was residing in the home for a period of at least one year immediately before the individual became institutionalized. Transfers to a trust established for the sole benefit of an individual under 65 years of age who is disabled are also allowable.

A transfer to a caretaker child is also permissible under certain circumstances. The child must have lived with the parent for at least two years. That child must also have provided such care to the parent that the caretaker child can demonstrate that their efforts permitted the parent to reside at the home and rather than in an institution or facility.

By far, the most challenged exception is the caretaker child. While in the past Medicaid has allowed these transfers based on rather limited information, more recently, Medicaid has begun challenging these transfers by imposing stringent rules on what constitutes a caretaker child.

Experienced elder law attorneys utilize these exceptions to benefit their clients and pass along assets to the next generation if this is the goal of the client and in his or her best interests. Our experienced attorneys that can help guide you through the complexities of applying for Medicaid.