Allocation of Transfer Penalty – When Community Spouse Makes
Transfer and Then Enters Nursing Home
Transfers by the spouse of an applicant are considered in determining the Medicaid eligibility of such individual. Under prior law, such transfers would also be considered again in determining eligibility for a community spouse who subsequently was institutionalized. That is, transfers by a community spouse who was subsequently institutionalized resulted in a double penalty. OBRA ’93 (which hasn’t been changed by the current law) requires that a “reasonable methodology” be employed to apportion the period of ineligibility between the applicant and a transferor – spouse who is subsequently institutionalized.
Example: Individual is in nursing home. Transfer of assets by spouse results in a 20-month penalty period for individual. Eight months after the transfer, spouse is institutionalized. The remaining penalty period of 12 months is to be apportioned. Presumably, six months will be allocated to each so that individual’s period of ineligibility due to the transfer will total 14 months.
Keep in mind, that under current law the penalty commences as outlined in Post #15.
Note: If one spouse dies or leaves the institution, the remaining portion of the penalty is allocated to the other spouse.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2009, Post #19
Showing posts with label Medicaid penalty. Show all posts
Showing posts with label Medicaid penalty. Show all posts
Wednesday, April 1, 2009
Monday, March 30, 2009
Steps to Take for Transfers that Initially Would Appear to Give Rise to a Medicaid Penalty
Steps to Take for Transfers That Initially Would Appear to Give Rise to a Medicaid Penalty
1. I have seen many situations in which a parent has transferred virtually all of his or her assets to a child. If such parent goes into a nursing home within 60 months, there is a possibility of a substantial period of ineligibility.
2. One ameliorating possibility is that all transfers utilized by the child on behalf of the parent do not give rise to a penalty. The problem with such approach is that if a parent goes into a nursing home and funds are remaining, funds that have not been utilized for the parent are treated as uncompensated transfers.
3. If a transfer is made to a child and a parent goes into a nursing home very soon thereafter, the monies can be returned to the parent either directly or through a power of attorney. That is, any monies returned undo the transfer.
An interesting example would be the gifting of a home by a single parent to a child. If the parent goes into a nursing home more than 60 months after such gift, the gift would not be subject to penalty. Of course, the child’s basis (cost) becomes the basis of the parent.
A more interesting example is the parent giving the home to a child (or possibly two children) and the parent goes into a nursing home four years later. A possible planning technique would be for the child or children to pay for the nursing home for the remainder of the 60-month period.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© March 2009, Post #18
1. I have seen many situations in which a parent has transferred virtually all of his or her assets to a child. If such parent goes into a nursing home within 60 months, there is a possibility of a substantial period of ineligibility.
2. One ameliorating possibility is that all transfers utilized by the child on behalf of the parent do not give rise to a penalty. The problem with such approach is that if a parent goes into a nursing home and funds are remaining, funds that have not been utilized for the parent are treated as uncompensated transfers.
3. If a transfer is made to a child and a parent goes into a nursing home very soon thereafter, the monies can be returned to the parent either directly or through a power of attorney. That is, any monies returned undo the transfer.
An interesting example would be the gifting of a home by a single parent to a child. If the parent goes into a nursing home more than 60 months after such gift, the gift would not be subject to penalty. Of course, the child’s basis (cost) becomes the basis of the parent.
A more interesting example is the parent giving the home to a child (or possibly two children) and the parent goes into a nursing home four years later. A possible planning technique would be for the child or children to pay for the nursing home for the remainder of the 60-month period.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© March 2009, Post #18
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