Giving Away Assets to Qualify for Medicaid
Giving away assets to qualify for Medicaid is a strategy that many people use when they are concerned that they might be going into a nursing home because they think it will help them qualify for Medicaid more quickly. Unfortunately, giving away assets usually involves way more risks and harm than good.
Medicaid has a 60 Month Look Back
Medicaid has a 60 month look back from the time you file your Medicaid application. Therefore, if you’ve given away any assets within the 60 months prior to filing your application, Medicaid is going to penalize you for those giveaways and you won’t qualify. The penalty is based on how much money you gave away during the 60 months prior to the application. The penalty is calculated by taking the amount given away and dividing that by a monthly divisor which is set by Medicaid each year. For example, if you have given away $64,000 within the past 60 months and the Medicaid penalty divisor is $6,400, Medicaid will impose a 60 month penalty.
There are More Risks Than Rewards When You Give Assets Away
The other problem with giving away assets is that once you give them away you no longer have control over them. Whoever you give the assets to has potential creditors and predators and your assets are now subject to those creditors. Most people say well, my son or my daughter would never do anything with my assets. However, what if they get sued? What if they get a divorce? What if they have to file bankruptcy?
Once you give your assets away to that person, then your assets are now subject to their bankruptcy filings, divorces, lawsuits, etc. I’ve seen more people than I can count unfortunately who used this strategy and had to go into a nursing home and the assets were no longer there and they couldn’t get the care that they needed. While there are strategies to protect assets from long term care costs, giving them away to relatives is not something that I recommend. There are better ways to accomplish the same objective without the risks.
To learn more, get a copy of our guide Medicaid in Alabama – What You Need to Know. You can also give us call at 256 251-2137.
