Archive for November, 2008

Ask Craig A. Andreoli

The Problem:

Can I halve my available resources for Medicaid purposes if I place my money in a joint account with my adult child? Why do I hear about people getting Medicaid benefits for nursing home care without a penalty period?

The Rules:

For eligibility purposes, Medicaid considers joint bank accounts as 100% owned by the Medicaid applicant. Medicaid will deny you benefits if you have more than $13,050 (increased recently from $4,350) of available resources. A penalty period is imposed for non-exempt transfers of assets meant to reduce the applicant’s available resources below $13,050 during a five-year “look back period.”

The Strategy:

People often believe erroneously that if they create a joint account with an adult child, half that money will not be considered available resources for Medicaid purposes. But this is only true if the applicant can prove that the joint owner contributed that money to the account.

Often, people will gift or transfer money to impoverish themselves to meet the resource level, but if the gift is non-exempt, the penalty period will be applied. Therefore, the transfer must be an exempt transfer. Assuming all other Medicaid criteria have been met, the applicant who divests himself of assets through exempt transfers will be eligible for Medicaid benefits.

How It Works:

People can satisfy Medicaid’s maximum resource allowance criteria without invoking a penalty period by having less than $13,050 in resources, or if they make exempt transfers that reduce their resource level below $13,050

Exempt transfers include transfers to a spouse and/or a disabled child. Medicaid applicants can also transfer assets to certain types of trusts that will not interfere with their eligibility. One such trust is a “special needs trust,” available to applicants who are disabled and under the age of 65. Strict adherence to statutory requirements must be taken to effectively create the trust, but using exempt transfers may help to reduce your resource level and decrease or eliminate any Medicaid penalty period.

The Results:

It should be noted that any course of action taken to divest assets may have adverse consequences for the applicant, his spouse or even any perceived beneficiaries of the applicant’s estate with respect to taxes or government benefits. Therefore, it is always a good idea to have a competent legal professional outline a balanced estate plan that can achieve your desired goals.

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