The Flammia Myth-Information Series – Part 5: Transfers Between Spouses

In the last edition of the Flammia Myth-Information Series, I talked about Medicaid’s five-year lookback period. To recap, the Medicaid office scrutinizes all asset transfers made by a Medicaid applicant during the preceding five years to determine if any of those transfers should trigger a penalty. Under Medicaid rules, claims examiners will go through an applicant’s last five years of financial records with a fine-tooth comb to see if the person sold something for less than it’s worth or gave something away. Medicaid presumes that transfers and gifts are done in order to lower a person’s assets so he or she can qualify for Medicaid. If an applicant isn’t able to rebut the presumption, then the penalty period kicks in after you apply for Medicaid you are otherwise eligible.

Fortunately, there is a saving grace. Not all transfers are the same in Medicaid world. Florida Medicaid law provides that certain types of asset transfers aren’t subject to the five-year lookback period and don’t trigger any penalty period.

Asset transfers between spouses are exempt from triggering a penalty. This is especially valuable for many of the clients I see. Since a Medicaid applicant can’t have more than $2,000 in assets, we can transfer assets to the well spouse to get the ill spouse below $2,000—and the transfer won’t be subject to the five-year lookback period.

There are a few other types of penalty-exempt asset transfers. Those made to an adult child with a disability are exempt, as are transfers made to certain specialized trusts, which mandate that Florida Medicaid must be repaid from any remaining trust assets upon the death of the trust beneficiary.

If some transfers are exempt, could a Medicaid applicant make these types of asset transfers on their own and skirt the penalty period? In a word, no. The Medicaid rules are extremely complicated. They are also constantly changing. Trying to do your own transfers based on what you read in a blog article is like walking into a minefield with a map sketched on the back of a cocktail napkin. With so much at stake, it’s just not worth the risk.

Remember, Medicaid Planning isn’t about hiding assets from Uncle Sam. It’s about safeguarding those assets so they can be used to enhance your elderly loved ones’ quality of life. If you want to be absolutely sure you’re doing it right, give the Flammia Elder Law Firm a call. Medicaid Planning is one of our specialties and it would be an honor to assist you.

 

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