Medicaid’s look-back period is meant to prevent Medicaid applicants from giving away assets or selling them under fair market value to meet Medicaid’s asset limit. However, often well-meaning individuals “give away” funds not in an attempt to “get on Medicaid” but rather just because of living life. Take for example the dad who gives his daughter money to get out of a horrible marriage, or who proudly buys his son a car after graduating from college. Each would be seen as transfers, if in the next five years, he needed Medicaid assistance. Both examples are considered “gifting” and are subject to transfer rules. Sadly, all transfers are impacted regardless of intention.
HOW these rules may impact your patient is an important variable to eligibility. Transferring any assets for less than fair market value within the 5-year look-back will impose a penalty period. The length of the penalty period will depend on the amount of uncompensated transferred. The “penalty divisor”, is tied to the average cost of nursing home care. How long would the transferred amount otherwise have paid for care?
For example, if the applicant has a $7500 uncompensated transfer, but otherwise is eligible, they will be approved with approximately a ONE-month penalty. This means they are approved, covered only with Acute care services for one month, then they will be able to receive full ALTCS coverage at the end of the penalty. Currently Arizona’s “penalty divisor” is based on the county in which the applicant resides. This value changed 10/1/2021. Please see the attachment with the new penalty rates.
Understanding the impact of a possible penalty for your resident is an important part of the overall success of the process. Non-payment issues may arise if the applicant is unable to pay for care during the penalty period.
