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Calculating the Florida Medicaid Transfer Penalty

In order to receive nursing home or assisted living Medicaid in Florida, the applicant must not have given away any assets within five years of applying for Medicaid benefits.  This is generally known as the Medicaid “look-back” period.  This rule makes complete sense as Medicaid is a “needs-based” program that assists those who fit into very strict income and asset levels.  Medicaid income and asset levels are listed on our Medicaid planning page.

In the event a Medicaid applicant transferred money away, the State of Florida will generally assess a transfer penalty based upon the amount of money transferred.  The reasoning to the transfer penalty is that money given away should have been used to care for the elder, so DCF will assess a time period for Medicaid ineligibility. The period of ineligibility for Medicaid is determined by dividing the amount of money given away by the average monthly private pay nursing home facility rate at the time of the Medicaid application.  

As of June 1, 2017, the transfer penalty divisor is $8,944/month.  The following is an example of calculating the Medicaid transfer penalty:

Mom makes a transfer of $100,000 on January 1, 2016 so that she leaves an inheritance to her children. Mom has a stroke 10 months later. On January 1, 2017, Mom is now in a nursing home and her Medicare rehabilitation days have run out.  Her countable assets now do not exceed $2,000 and her income is below the income cap (i.e., she is eligible for Medicaid but for the transfer). Because of the gift, a Medicaid transfer penalty is penalty is calculated as follows: $100,000/$8,944 = 11.18 months. Thus, because of the transfer, mom will not be eligible for Medicaid benefits until the middle of November, 2017, some 11.18 months after she applied for Medicaid.

In this example, in the event the children give the money back to mom, they will negate the transfer penalty. Mom will now have $100,000 and will now be ineligible for Medicaid because she is now over the asset cap.  Of course, with a good elder law attorney, the family may be able to legally protect her assets even though she is already in the nursing home.

An important aspect to gifting is that there is no de minimis exception for small gifts.  Christmas and birthday gifts to family are considered transfers for Medicaid purposes. These are considered uncompensated transfers for Medicaid purposes and they must be disclosed on a Medicaid application. The first rule is that uncompensated transfers are presumed to have been done for Medicaid/asset protection purposes. This is a rebuttable presumption with the Department of Children and Families. Importantly, if gifting has been done, hiring an elder law attorney will be exceedingly important as part of the Medicaid process.  

Transferring money away in order to protect the elder's funds only make sense in certain situations.  If you want to learn more about Medicaid and asset protection planning, please do not hesitate to contact our offices or attend one of our monthly Medicaid or Estate Planning seminars. 

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D. Rep DeLoach III
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Estate Planning and Board Certified Elder Law Attorney
Hello..I have a question. I moved my parents from another state in Jan 2017. We were leasing a home and the owner decided to allow us to buy the home. Due to debt ratio problems , my parents decided to join in on the purchase. The home was purchased by my parents, myself and my wife. After six months my parents decided that florida was not for the, and decided to go back to Texas. They Quit Claimed the home to us with the lenders permission. They are no longer on the Mortgage but are still on the note. They have not made or will not make any of the payments to the lender. In the event that one of my parents needs Medicaid, will this present a problem for them? There is no equity because the loan is only 4 months old. Thanks.
by Frank Roman August 9, 2017 at 02:58 PM
Charles, Thank you for the question! You are basically correct on your math but money can be protected/saved with good legal advice. The concept of the transfer penalty is that assets that were given away should have been used to pay for the applicant's care. In your example, no money is protected because it was, more or less, spent on mom's care in the facility. If you pay back the funds gifted, then no transfer penalty is created or the penalty was negated. If you give the money back, a good elder law attorney (like us) will generally have ways of saving/protecting the gifted funds. It is never too late to get an opinion on how to legally spend/protect the funds over the $2,000 asset limit, even if mom is already in a nursing home. Rep DeLoach
by Rep DeLoach March 20, 2017 at 01:10 PM
based upon this 8346 formula if I were gifted anywhere from 6,000-7,000 dollars I would be liable for 70-80 percent of one months NH stay at the 8346 rate. Paying Mom back lessens that liability although in the end it would be spent down by the NH to get to the 2K asset limit. Right?
by Charles Cohen March 19, 2017 at 12:52 AM
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