One of the most confusing aspects for many clients is qualifying for Medicaid coverage. The laws change often and each state has its own guidelines. Make the wrong decision, and you could pay high penalties. The five year look back period is one of those confusing elements and with it comes penalties for wrong moves. These are honest mistakes, but too often, they result in bigger problems for applicants.
While that’s not always the case, you can be sure it’s both a time consuming effort trying to right the wrong; it’s frustrating and can be overwhelming. You don’t want to break the law, but you don’t want to compromise coverage for yourself or a loved one. Fortunately, for most, it’s little more than a headache, but for some, trying to transfer the title of a home to a spouse or children can feel like a slow waltz that goes nowhere.
Don’t Jeopardize Your Qualification Efforts
Understanding the 5 year look back period is easier when you understand why it’s in place and what you can do to not jeopardize enrollment. This was put into place by Congress after it became clear many people “gifted” their assets in order to qualify for Medicaid. On the surface, that doesn’t seem like such a bad thing, but when it became clear that there were millions who made these types of gifts, got qualified for Medicaid and then reclaimed those assets afterwards, it’s easy to understand why better safety mechanisms were necessary. Even if you don’t agree with the rules, when you consider the potential costs to taxpayers, it begins to fall into place.
Congress simply didn’t want any hidden agendas that could threaten the program as a whole. And let’s face it – things are complicated these days in the collective healthcare sector and it’s not likely to improve in the short term, especially as we find our way with the new healthcare laws.
Medicaid sees assets as a way to pay for the costs associated with the applicant’s healthcare. If you’ve gifted an
entire fortune just to pass the qualification requirements, and if you’re caught, you could face tough penalties or even find yourself ineligible to qualify as a result. If, however, you’re within the guidelines, you can be exempted. You’ll want to meet with your attorney to go over the intricacies.
What Medicaid Won’t Penalize
There are those material possessions that Medicaid doesn’t penalize an applicant’s coverage. A few examples include personal effects and household goods, such as your furniture and clothes. Further, applicants may have one car, too; however, have more than one automobile and you could face penalties. You’ll have both federal and state requirements to satisfy.
As a rule, your primary residence usually isn’t factored into the mix in terms of it being a liquidated asset. In fact, most states won’t even allow you to sign your title over. Medicaid won’t force you to sell it provided it’s occupied by you or your spouse, its value is less than $500,000 for most states (California, New York and Connecticut place their numbers at $750,000) and the title is in you and/or your spouse’s name.
You may also sign your interest in the home over to your spouse. You can also gift it to a child who is both under the age of 21 and disabled.
While the guidelines sound confusing and overwhelming, a bit of solid legal direction can make all the difference. Contact our estate planning lawyers today to learn more about ensuring a smoother transition to Medicaid coverage.
Ellen LaPlante
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