Can’t I Just Give Away My Assets? Understanding the Penalty Period

After our last blog post about qualifying for nursing home Medicaid while owning a home, we received numerous questions about just giving the house away. Several sons and daughters were advised to just sign a quitclaim deed transferring mom or dad’s house to them before moving them into a nursing home. They thought that just moving the house out of their parents’ names would save it from Medicaid estate recover and be the easiest solution. Medicaid, however, penalizes its beneficiaries for any transfers made 60 months prior to applying for Medicaid. This is known as the penalty period, and currently for every $6,175 given away there is a one-month penalty assessed (that is, Medicaid won’t pay for the nursing home for one month). So, if a nursing home resident transferred a house worth $60,000 to his son, Medicaid will assess a 10-month penalty against that beneficiary and won’t pay the nursing home bill for those 10 months (and the resident will be responsible for the total cost of the nursing home. There are circumstances in which it is legal to transfer a house. Transfers of the home can be made to the following individuals without incurring a transfer penalty:
• A spouse;
• A child who is under age 21 or who is blind or disabled;
• A sibling who has interest in the home; or
• A “caretaker child,” who is defined as a child of the applicant who lived in the house for at least two years prior to the applicant’s institutionalization and who during that period provided care that allowed the applicant to avoid a nursing home stay.
The rules are tricky, so be sure to consult with a knowledgeable, experienced elder law attorney. If you or someone you know has questions about how these rules could work for them, please call our office for a complimentary consultation at (404) 843-0121.