FindLaw | Find a Lawyer. Find Answers.

There are many misguided beliefs about reducing assets to qualify for Medicaid long-term care benefits. In fact, one of the most commonly mistaken beliefs is that a Medicaid applicant or potential applicant can simply gift or transfer assets to another person or into another person's name in order to qualify for Medicaid benefits. As this article explains, the gifting of assets can disqualify an individual from receiving benefits to pay for nursing home care for a significant period of time.

In February 2006, the federal government enacted legislation that placed increased restrictions on Medicaid applicants and their families. Some of the most sweeping changes were those that dealt with the gifting of assets.

Under the new law, an applicant is now required to disclose transfers of assets made within five (5) years from the date of the Medicaid application. Prior to the February legislation, the period of disclosure, also known as the "look-back" period, was three (3) years for most transfers. Thus, for example, a woman who gives her grandchild a substantial amount of money as a gift during the 2006 holiday season will now be required to disclose that gift to the Department of Children and Families ("DCF") if she applies for long-term care Medicaid benefits any time prior to the 2011 holiday season.

DCF calculates a penalty period for a Medicaid applicant (during which time the applicant is ineligible to apply for Medicaid benefits) based on the total amount of the gifts and a pre-determined divisor set by DCF. The divisor is a dollar figure that theoretically represents the monthly average cost of nursing home care for an individual in the state of Florida. Currently, the divisor is set at $5,000 but is subject to an increase.

To illustrate, assume that a man gives $15,000 to his son in May 2006. DCF would calculate the penalty period by taking the total amount of the gift ($15,000) and dividing it by $5,000. Thus, the period of ineligibility would be three (3) months.

Consequently, it is recommended that anyone who may at some point in the future need to apply for Medicaid benefits consult with an Elder Law attorney before making a transfer of assets. An Elder Law attorney can advise an applicant or the family of an applicant on how some assets can be preserved for the future use of the applicant and/or his or her family. In addition, an Elder Law attorney can aid in remedying gifts and certain disqualifying transfers so that one can restore Medicaid eligibility.