When an application is made for Long Term Care (LTC) SMMC Medicaid benefits the question is asked whether you have given away, sold, or transferred any assets or property in the last five years. If the answer is yes, you must provide the Department of Children and Families (DCF) with an explanation of all such gifts or transfers during the last 5 years. Under the Medicaid rules, gifts or other uncompensated transfers are subject to the 5 year look back. Gifts that fall outside of the five year look back are not considered by Medicaid and there is no duty to report.
It is important to understand that it is criminal fraud to not report all gifts or transfers within the look back period to DCF and for failure to report you may be criminally prosecuted. A signed statement is required at the time of application swearing under penalties of criminal fraud that you have provided all required information to the best of your knowledge.
WHAT IS THE PENALTY FOR GIVING AWAY ASSETS/PROPERTY DURING THE LAST FIVE YEARS?
If an individual transfers, gifts, or gives away assets to anyone (except a spouse or a disabled child) for the purpose of becoming eligible for LTC Medicaid benefits, Medicaid imposes a penalty of one month of ineligibility for every $8,346 transferred. The DCF states that the average cost of monthly long term care in Florida is $8,346. DCF calculates penalties for impermissible gifts by dividing the amount of the gift by $8,346, thus determining the months of ineligibility. For example, a gift of $83,460 divided by $8,346 = 10 months of ineligibility.
If a gift was given for a purpose other than to qualify for Medicaid, you may rebut the fact that the gift was given to become eligible for Medicaid benefits by providing documentation and/or an affidavit stating the facts. DCF will then determine whether it is a reasonable and acceptable explanation.
WHEN DOES THE PERIOD OF INELIGIBILITY COMMENCE?
An important factor in determining the effect of an impermissible gift is the commencement date for the period of ineligibility. The penalty for an impermissible gift does not start running until the donor (the applicant) is otherwise eligible for LTC Medicaid benefits and has filed an application for benefits. Thus, the penalty period can start long after the gift was made and can even extend beyond the expiration of the look back period.
For example, if an applicant made a $166,920 gift on January 1, 2012, and then 36 months later in December, 2015 applied for LTC Medicaid benefits, the applicant would still be within the five year look back period, and would be faced with a 20 month period of ineligibility beginning on the date they were otherwise eligible for Medicaid benefits, applied for benefits and the Medicaid penalty period was invoked by Medicaid. Otherwise the applicant is waiting a full five years from the date of the gift to apply for Medicaid benefits (in this example January 1, 2017) without being subject to the look back and penalty. The lesson here is to carefully analyze any past gifts.
IF YOU HAVE TRANSFERRED/GIVEN AWAY ASSETS/PROPERTY DURING THE LAST FIVE YEARS, IS THERE A WAY TO FIX IT?
The effect of an impermissible gift can be mitigated by either returning the gift or proving that the gift was later disbursed for the benefit of the applicant.
Our office can help you with Medicaid planning and applying for Medicaid benefits. When you call the office, be sure to tell them Linda told you to call! We look forward to seeing you soon.
By Linda R. Chamberlain, Board Certified Elder Law Attorney