Transferring assets within the five years prior to applying for Medicaid can make you ineligible for coverage. It’s called the “lookback period”. But there are several exceptions including an exception that was designed to help people stay in their homes longer. If you transfer your home to your child who has lived with you for at least two years before you go into a nursing home, and that child was providing care that allowed you to live at home longer, you will not be penalized. There are other important exceptions you should know about if you are planning for long-term care.
Exceptions to Penalties for Asset Transfers
Under most circumstances, you will be penalized for transferring assets during the lookback period because those assets could have been used to pay for your medical care. But you will not be penalized for transferring assets to the following recipients:
- Your spouse or anyone else is the transfer is for the sole benefit of your spouse
- A child who is blind or disabled or a trust for a child who is blind or disabled
- A trust for the sole benefit of someone who is disabled and under 65 years old, including yourself under some circumstances
Exceptions to Penalties for Transferring Your Home
There are also exceptions specifically for transferring your home. You can transfer your home, without penalty, to any of the following:
- Your spouse
- A child who is under 21 years old
- A child of any age who is blind or disabled
- A sibling who has lived in your home for at least year before you become institutionalized if they already hold an equity interest in the home
- A child who has lived in your home for at least two years prior to your institutionalization and who provided care that allowed you to stay out of the nursing home – referred to as a “caretaker child”
- A trust for the sole benefit of someone who is disabled and under 65 years old, including yourself under some circumstances
Medicaid laws are constantly changing, and although the exceptions are created by Federal law and apply in all states, there are important differences in how each state agency works. For instance, each state has its own qualifications for a “caretaker child”. To learn more about how to protect your eligibility for Medicaid, please talk to an experienced estate planning attorney in your area right away.
