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When to Transfer Assets to Qualify for Medicaid?

It’s a topic I’ve not yet covered on this blog, but one that I’m asked about consistently by adult daughters and sons alike:

When should I transfer assets so that my aging parent qualifies for Medicaid?

The most recent person to broach the subject with me was Michael from New York City.  His mother had a stroke in 2009 that left her with severe short-term memory loss.

  • She can’t drive, plan meals, or cook for herself.
  • She despises Meals-on-Wheels.
  • She takes some medications to prevent seizures and others to help with the memory loss.
  • She lives in a condo and wants to stay there with supportive services (no live-in caregivers thank you very much).

BUT…

Michael’s sister is insisting on moving mom to an assisted living facility. Michael feels this is premature and will wipe out mom’s assets and send her to a nursing home earlier than necessary.

“So,” he asks me, “should we transfer assets so that she qualifies for Medicaid?”

My answer to Michael would be the same for anyone else: Maybe. But not without some legal guidance and a clear understanding of the problem you’re trying to solve.

Yes, Medicaid pays for nursing home care.  But qualifying for this type of Medicaid is not as easy as removing funds from a bank and closing an account.

Think about this from the state’s perspective…

With mom’s blessing, Michael removes money from her account and then what…?

The state foots the bill for mom’s nursing home bed through the end of her life?

No way.

Instead, the state wants to be certain mom can’t contribute to the costs.

To get that assurance, they do what is commonly known as a “look back” – a financial audit that can stretch back as many as five years.

One guess what they do when they find the transfer mom authorized Michael to make…

They call a foul and tell mom that she can’t qualify for Medicaid until she spends the transferred money.

If she’s in a nursing home, they let her pay for the cost of those services until her money is spent down to the Medicaid limit and then they reconsider her application.

If she’s not in a nursing home, she’s invited to spend down her money in other ways until she reaches the Medicaid limit.

Are there ways of sheltering assets so that Medicaid will pay for the nursing home and Michael and his sister can inherit something?

Yes.

But don’t kid yourself. This is legal territory. Don’t venture into it without a lawyer.

In the meantime, Michael’s mom is in need of help at home. The really good news in this scenario is that she is open to help so long as it doesn’t come in the form of a live-in caretaker.

Knowing that, I’d advise Michael to ensure that mom gets the kind of help she’s open to right away to see if it makes a positive difference.

If it does, maybe a higher level of care can wait.

If it doesn’t, it may very well be time.

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