The Medicaid Penalty Period Explained

Table of Content

• Will You Have To Turn Over All Of Your Assets To The Nursing Home
• Should You Sell The Family Home To Pay For A Nursing Home When Money Runs Out?
• When Does a Medicaid Penalty Period Begin?
• Medicaid Penalty Period And Penalty Divisor Example
• How Does a Nursing Home Get Paid During a Medicaid Penalty Period?
• How The Medicaid Look Back Period Impacts The Medicaid Penalty Period

While this penalty is relevant to persons receiving assistance via a government assistance program, such as Medicaid and SSI, it is not relevant to Medicaid’s look back rule and penalty period. Instead, the marriage penalty is referring to a beneficiary losing their benefits because the combined income and / or assets of the newly married couple cause the beneficiary to be ineligible. Careful planning for potentially devastating long-term care costs can help protect your estate, whether for your spouse or for your children. In Suffolk County in New York, the figure used is just over $12,000 – that’s the assumed average monthly cost of a nursing home. Since the $120,000 is within the look back period, dividing $120,000 by $12,000 results in ten months of care you could have received had you not made that gift.

I firmly believe that if someone has the money, trust or not, they should be paying their own way. Granted, NH cost much more than MC, but again, if one has the funds, one should pay one's own way, in my opinion! My brothers may not agree, but they don't manage any of this, never say anything and don't do much at all for any part of this journey.

Will You Have To Turn Over All Of Your Assets To The Nursing Home

If so, can the annuity pay out and the Trust pay out each month whatever $ amount she has as a shortfall from her SS income to totally pay her NH bill? They both get done as a scheduled deposit first of the month into her checking account that gets her SS$. Then you as her DPOA and signature on her checking account write a check from her checking to Shady Acres NH to cover that months bill. Most states have laws on the books making adult children responsible if their parents can't afford to take care of themselves. Medicaid says that for every $9000 Dad gave away, Medicaid imposes a one-month penalty.

Therefore, when this is the case, the calculation must be figured based on a reasonable life expectancy. When the senior passes away, Medicaid requires any remaining compensation to be paid to them.Read more about caregiver agreements. In New York City, the Medicaid regional rate for 2022 is $13,415. In our example, the calculation is thus $134,000 divided by $13,415, resulting in a “penalty period” of approximately 10 months. During this time, someone other than you would have to pay for your care.

Should You Sell The Family Home To Pay For A Nursing Home When Money Runs Out?

But you will not turn over control of your accounts to the nursing home. The penalty period is calculated by dividing the amount or value of the transfers by Medicaid’s published “Regional Rate” for nursing home care in the geographic area where the application is filed. For applicants who receive SSI , reside in a nursing home, and have violated Medicaid’s look back rule, their monthly SSI payments are reduced to $30 plus any state supplement .

Some Medicaid applicants are taken care of in their home by their children prior to applying for Medicaid long-term care benefits. This type of arrangement needs to be thoroughly documented and you should consult with an attorney first to make sure it is Medicaid approved. The initial consultation gives you the opportunity to help you understand your current Medicaid eligibility. It also gives us a better understanding of how we can help you plan to protect your home and life savings from nursing home costs while getting you the benefits you need to pay for care. Situations where only one spouse is applying for long-term care can be VERY complicated to plan for. The penalty period doesn’t start from the day the gifting was done or the assets were sold under fair market value, the period starts from the day the applicant was denied eligibility due to the lookback period.

When Does a Medicaid Penalty Period Begin?

Less fortunately, these options are often confusing and difficult to implement without the expertise of a Medicaid planning professional. If you are sent to a skilled nursing facility for care after a three-day inpatient hospital stay, Medicare will pay the full cost for the first 20 days. For the next 100 days, Medicare covers most of the charges, but patients must pay $185.50 per day unless they have a supplemental insurance policy.

When a Medicaid applicant is penalized with a penalty period for making disqualifying transfers, they have to come up with the money to pay for long term care during the Medicaid ineligibility period. This, unfortunately, puts the applicant in an extremely difficult situation. Remember, for one to be eligible for Medicaid long term care, they must have limited income and assets. If the applicant did not have limited financial means, they would not have otherwise qualified for Medicaid, and hence, be penalized with a penalty period for violating Medicaid’s look back rule.

In three different cases, the Pennsylvania Superior Court has applied the law to enforce payment by a child for support of a parent. In one case, a mother brought the action against her son. In two other cases, a collection action was brought against a child by a nursing home. In the 2013 Pittas case, one son was found liable for his mother’s $93,000 nursing home bill. A home can be transferred to a sibling should that brother or sister own a portion of the home . And they must have resided in the home for at least one year before nursing home placement of the person in question.

Annuities, also referred to as Medicaid Annuities or Medicaid Compliant Annuities, are a common way to avoid violating the Medicaid look-back period. With an annuity, an individual pays a lump sum in cash. In return they or their spouse receives monthly payments for the duration of that person’s life or for a set number of years.

Under this exemption, the parent can transfer their home to their child without penalty. This means the non-applicant spouse is permitted to retain up to either 50% or 100% of the couple’s assets, up to the allowable $137,400. The remaining assets must be “spent down” until the individual in need of long-term care meets the asset limit for Medicaid qualification.

The dollar amount changes on an annual basis, and there is some variance to this exception dependent on one’s state of residence. However, in reality, an applicant spouse can transfer unlimited assets to their non-applicant spouse without violating the look-back period. This is because, for Medicaid eligibility purposes, all assets of a married couple are considered jointly owned. (Learn more here.) However, a non-applicant spouse is not able to keep more than the allotted CSRA. Don’t let the “look back” and the “penalty period” deter you from seeking the advice of an Elder Law attorney.

Medicaid applicants can transfer assets or create trusts for their disabled kids that are under the age of 21. Many families worry about what will happen if long-term care is needed or a medical emergency arises during the Medicaid penalty period. Unfortunately, if a senior is ineligible for Medicaid because of a penalty, the family has to make out-of-pocket payments for long-term care needs. The out-of-pocket payments may last until the expiration of the Medicaid penalty period. Under the IRS annual gift tax exemption, people can gift assets of up to a particular amount without paying taxes.

The look-back rule has established guidelines penalizing individuals for gifting and transferring their property to become eligible for Medicaid. First, it is essential to understand why the Medicaid look-back rule is in place. Medicaid is an assistance program providing benefits based on means test. A means test looks at the monetary resources a person has available to pay for specific goods or services. The program then determines if the individual qualifies based on their income and assets.

It was mom's (and dad's) money and should be used for their benefit. So that there would be no question about the transactions and her money, I went to a separate bank to create her Trust account and also created an account for me as the Trustee. That way I never really touch the money and the transactions are all electronic and explainable as to what went where and why. If the “family property” that Dad gave you is worth $90,000, the Penalty Period will be 10 months long.