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Wednesday, January 27, 2016

Can You Avoid a 5 Year Penalty for Uncompensated Transfers?

Medicaid imposes a transfer penalty that can last for up to 5 years for all uncompensated transfers made prior to the application for nursing home Medicaid. This provision makes crisis planning for nursing home not efficient. Yet many people are reluctant to transfer their assets ahead of time and impoverish themselves, because, of course, no one knows when nursing home will be needed.

One way of avoiding the nursing home penalty is to prove to Medicaid that the transfer was made not for the purpose of Medicaid giving. For example, grandmother has a history of gifting large amounts of money to grandchildren, and continues doing so for several years while being in good health. If, at some point, she has a stroke and has to go to a nursing home, Medicaid will deny her application, claiming that the money gifted was an uncompensated transfer. The family can then appeal and try to prove to an administrative judge that the transfers were done while she was in good health and not as part of Medicaid planning.

This is an affirmative defense, meaning that the burden is on the family to prove their point, not on Medicaid to prove the opposite. If there is no evidence that grandmother was in good health while gifting the money, and if there is no pattern of gifting the money, the petition will likely be denied.

Disclaimer: This article only offers general information.  Each situation is unique. It is always helpful to talk to a specialized attorney, to figure out your various options and ramifications of actions.  As every case has subtle differences, please do not use this article for legal advice. Only a signed engagement letter will create an attorney-client relationship. ATTORNEY ADVERTISING


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