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.