Medicaid Transfer of Assets Rules

Medicaid is a state-operated health insurance program that operates under federal guidelines and receives part of its funding from the federal government. Eligibility for Medicaid requires meeting income and resource limits that vary between states. Typically, a single adult may have no more than $2,000 in assets in order to meet Medicaid eligibility requirements. Assets include cash on hand, checking and savings accounts, IRAs, life insurance policies with a cash value, houses other than the primary residence, vehicles other than the one allowed per Medicaid guidelines and other resources that have a cash value.

"Look-back" Period

• Medicaid may look back at transfers of assets for the past 60 months (5 years).

Penalty

• Medicaid may assess a penalty for any assets that are transferred for less than cash value. This includes assets that are given to others as "gifts." For example, if $50,000 is transferred to a friend as a "gift" in order to meet the Medicaid resource limit in order to go to a nursing home, Medicaid may deny eligibility until average nursing home expenses reach $50,000. For example, if the average monthly cost of a nursing home is $3,000, Medicaid may withhold payment for $50,000 / $3,000 months--16 to 17 months.

Documentation

• Documentation for assets that are transferred must be kept for Medicaid eligibility purposes. For example, if you have $50,000 in a retirement savings account, and this amount is used to pay off outstanding debts, Medicaid will require receipts. Without documentation, Medicaid eligibility may be denied or a penalty may be assessed.