Medicaid Assessed a Penalty – What Next?
Most people are familiar with the popular Medicaid 5-Year Look-Back penalty. In order to qualify for Medicaid, you cannot transfer assets without receiving fair market value in return within a five-year period from the date you apply. This rule is to prevent a strain on the Medicaid funding system with an overload of people gifting assets to family members and then applying for benefits.
How Much is the Penalty?
The transfer penalty is the average cost of private pay nursing home care in the resident’s state. In Maryland, the penalty divisor (transfer penalty) in 2022 is $350/day or $10,190/month. The penalty period, or timeframe of Medicaid ineligibility resulting from a transfer violating the lookback rule, generally begins on the date an applicant applies for Medicaid. It does not begin on the date the disqualifying transfer occurred. The length of the penalization is based on the amount gifted in conjunction with the penalty divisor. Essentially, the penalty is equivalent to the length of time an applicant would have been able to pay for long-term care had he or she not transferred the money out of his or her estate.
During this time of Medicaid ineligibility, the patient is required to pay for long-term care. Even more burdensome, if the patient receives SSI those benefits will be reduced during this ineligibility period as well. What options are available in this situation?
Curing the Penalty
If the applicant violated the look-back provision, he or she may be able to cure the penalty by having the assets returned to his or her estate. If all of the money is returned, the penalty may be eliminated. If only part of the assets are returned, the penalty period may be recalculated and reduced.
If the applicant does not believe the look-back provision was violated, there is an appeals process.
Getting Legal Help
Medicaid planning is a complex strategy that takes into account all of the laws and regulations, both federal and state. When someone fails to plan ahead, they may find themselves in a predicament if any assets were transferred out or “spent down” inappropriately.
Whether you want to learn more about Medicaid and long-term care planning on the front end, have found yourself in violation of the look-back rule, or need to appeal a penalty assessment, contact the knowledgeable estate planning attorneys at Stouffer Legal in the Greater Baltimore area. We can help assist in determining whether there are any disqualifying transfers, calculate the value and any penalty periods and steer you towards the best course of action. You can schedule an appointment by calling us at (443) 470-3599, emailing us at office@stoufferlegal.com, or register for an upcoming free webinar using the link below:
https://attendee.gotowebinar.com/register/7312967705523612176
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