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Because a nursing home confinement brings such fear, an industry of "asset-hiding" has developed. Especially in states where there is an unusually high amount of retired people, the legal profession is busy helping people give away what they have in order to qualify for Medicaid. This might involve an irrevocable trust (a revocable trust cannot hide assets), transferring assets to children or grandchildren, and other techniques designed to make one appear penniless. If this seems a viable solution, an elder care attorney should be consulted. Time limits may make asset transfers unworkable if there is not sufficient time to do so prior to needing long-term care services. In addition, assets that are transferred to children or grandchildren can be totally lost if their personal circumstances put the assets in jeopardy (such as divorce).

Very often the spouse and children of an ill or frail person desires to save the assets while transferring the cost of a nursing home stay to the government. Of course, the term "government" actually means each tax-paying citizen. There is a window of time that allows the individual to move assets entirely into the name of another. For this time period to be utilized, the illness must be handled at home for a long enough period of time to allow completion of the transfers and wait out the prohibited transfer time period. This period of time is called the "look-back period." The amount of allowed transfer changes periodically, always lengthening. It states that an individual who enters a nursing home within that stated period of time will be ineligible for Medicaid benefits if asset transfer was made. The length of ineligibility will depend upon the size of the transfer. Under some conditions, the time period may be unlimited.

Each state sets an average cost for nursing home care. The ineligible period is based on the costs set down by the state. If the financial transfer would have covered 5 months of care, then that is the time period of ineligibility. Whatever amount of time could have been covered by the financial value of the gift, that is then the amount of time lost for Medicaid benefits.

EXAMPLE:

Care in a local nursing home costs $3,500 monthly. The community spouse transfers $25,000 to her daughter in an effort to protect the assets and soon thereafter applies for Medicaid benefits for her ill spouse. The state would divide the $25,000 by the cost of the nursing home ($3,500) to determine the length of time she is ineligible to receive benefits for the institutionalized spouse: $25,000 divided by $3,500 = 7.14 months. Therefore, the ill spouse could not receive Medicaid benefits for 8 months due to the inappropriate transfer of assets.

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There is no maximum period for disqualification of benefits. Only transfers made during the prohibited time period prior to application for Medicaid benefits actually applies. Therefore, if institutionalization occurs during the prohibited time period following an asset transfer, it would be wise to delay application until that period of time has passed.

EXAMPLE:

A married couple gives their children $300,000 as a gift. In the year following this transfer, one of the two enters a nursing home. Because the gift would disallow benefits for 86 months, the community spouse does not apply for Medicaid or COPES benefits until sufficient time has passed. By doing so, she has eliminated a penalty because DSHS will not look beyond the asset transfer eligibility period.

Not all transfers are illegal causing periods of ineligibility. Certainly, gifts made outside of the "look-back" period are not illegal. Trusts have different time tables than do non- trust assets so again, consultation with an elder care attorney is advised.

It is also legal to transfer a home to a child of the applicant, if the child has lived in the home and provided care to the beneficiary for the two years immediately prior to needing care in a nursing home or receiving COPES benefits. It is also legal to transfer the home to the applicant’s sibling if the sibling has an equity interest in the home and has lived in the home for a one-year period immediately prior to institutionalization or COPES eligibility.

Transfers may be made to a spouse or to a trust for the sole benefit of the spouse. This is also true for transfers made to an annuity for the sole benefit of the community spouse. Transfers may be made to a minor or disabled child or to a trust for the child. In fact, transfers may be made to a trust for the sole benefit of any disabled person under the age of 65.

Any transfer may legally be made in situations where the gifts will be returned to the Medicaid applicant.

Transfers of assets are generally exempt when a Partnership policy has been purchased. This is because Partnership nursing home policies are for the explicit aim of preserving assets (but not income). Most states do not have Partnership policies available, however, so the general population cannot take advantage of them.

What many people may not realize is that many states have instituted penalties for those who refuse to return illegally made gifts. The amount of penalty will depend upon the state in which it occurred. In addition, illegal transfers that are not returned are deemed

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to be fraudulent conveyance, which gives DSHS the right to petition the court to set aside the transfer and require the return of the assets given away.

What if the recipient of the gift no longer has the assets they were given? DSHS can waive the application of the transfer penalty if they feel undue hardship would result. This might happen if the money had been spent and there was no way to recover it. Probably DSHS would only waive the application of the transfer penalty if it were felt that no intent to defraud Medicaid existed and if recovery of the gift might cause the recipient or their family to face loss of shelter, food, clothing, or health care.