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The Rules About Assets for Medicaid

Medicaid is a health insurance program operated by the state with federal guidelines and some funding. Eligibility for Medicaid is determined by income and resources limitation and varies amongst states. Assets are normally limited to $2000 including savings, checking and cash on hand in order to meet eligibility qualifications. This limitation excludes primary residence and ownership of one vehicle. Medicaid covers care also for someone in a nursing home.

  1. Transfer Penalty

    • Medicare imposes a penalty for people who transfer property and do not receive a fair value return on their property. There are harsh restrictions for people who try to transfer their asset under the Deficit Reduction Act (DRA). DRA is a method used to preserve assets for individuals and family members so they can be Medicaid eligible. The penalty provides a period that the person who transfers the asset will not be eligible for Medicaid. This time period is calculated by dividing the value of the transferred asset based on what Medicaid establish as the average private pay cost for the individual to stay in a nursing home in their state. For example, if your state nursing home monthly cost is $5,000 and the value of the property you gave away is worth $50,000, you will not be eligible for benefits for 10 months.

    Exceptions to Penalty

    • Exceptions to the penalty rule include transferring property to a blind or disabled child or establishing a trust for the blind or disabled. Transferring assets to a spouse or to someone else for the benefit of the spouse is also exempt. Additionally, it is possible to establish a trust for the purpose of a disabled individual, who is under the age of 65, regardless to whether the trust will benefit the applicant. Home transfers are possible without any transfer penalties if the recipient is the spouse, a child under the age of 21, blind, disabled or a resident sibling, who lived in the residence prior to the applicant's institutionalization.

    Nursing Home Income

    • Medicaid guidelines dictate that all nursing home residents' income goes toward the nursing home minus a few deductions. The deduction includes any ineligible medical charges such as medical co-pays, deductibles, insurance premiums and care for a dependent living at home. Nursing home residents also receive a personal care allowance normally under $100 a month, but the amount varies by states.

    Income Cap States

    • Some states use the income cap program, which does not allow nursing home residents to have any income exceeding $2,022 per month for 2010. It is only allowable if the amount is placed into a Miller Trust Fund.

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