Asset transfers and the five-year look back.

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If there is more of a transfer penalty than planned for, does Medicaid eligibility HAVE to be delayed or can they chose to put a lien on the house for later asset recovery if care is needed sooner? Trying to save the house may not be worth it if there is a way to use what's left in the retirement acct. to cover the bills between application and receipt of services. If I can delay whatever penalty might happen, I can provide care longer. If it will be an immediate financial hit, but we don't know when (due to medical changes), my health can't take it.


Just to clarify ... has your mother transferred some of her assets within the past 5 years? You sound like you've been planning on a transfer penalty. Why would it be more than you expected? I think a few more details would help you get specific answers from the forum members who are highly knowledgeable on this subject.

The state can recover costs from any assets existing when the recipient dies. That is typically a house. So, no, I don't think a lien on the house can serve as a way to cover penalties.

Are you living in your mother's house? Have you been caring for her for two years or more?

Assets have to be spent down to be under the allowed limit. Paying bills is a valid way to spend down.

I think your best bet is to consult an attorney specializing in Elder Law. Doing what needs to be done correctly to minimize any penalties and get Mother eligible for Medicaid as soon as possible will be worth the lawyer fees.
We are struggling with this same issue and will be seeing an elder law attorney soon, I hope. My understanding is that if you are providing care, then there has to be a caregiver agreement in place prior to any money being paid to you in order to exempt those funds or house assets.
How did you get enough information about Medicaid to even ask such detailed questions?
425 helpful answers
Unfortunately there is no way to avoid the penalty if gifts were made within the 5-year period prior to the date you apply for Medicaid. The state expects you to be able to pay for the penalty period yourself, or out of the gifted assets. If you can get the gifts back, however, then the penalty will be erased. In some states the entire amount of the gift must be returned, but in other states a partial return will at least reduce the length of the penalty.
Thanks for all the responses. I'm not trying to avoid the penalty, just trying to strategize. Yes, I've consulted two elder law attys. I was told to separate the assets and finances. Too late. My mother and I have commingled funds for over a decade. I'm in the position of a Community Spouse, but without the protection of a marriage. We own a house, two cars, a tractor, livestock and pets. Our financial arrangement has never been 50:50 as my mother has more money and I do all the work. We never made a contract to pay me for her care. I've spent the last two years putting down pets and livestock, because Medicaid won't allow them as an expense. Bank of America won't discuss a change in mortgage payments until after we are behind in payments. When my mother reaches a point when she needs more care than we can afford, we will both be in a crisis situation. I'm just trying to buffer the crisis factor because I can't do anything in a hurry anymore. We can afford some home care, as long as she can stay home. She cannot afford a nursing home unless Medicaid helps pay for it. If I have to throw away my stellar credit rating and walk away from our mortgage, I might as well give the house to Medicaid if it will give me more time to find someplace to live (with bad credit).....sorry, I'm ranting again. I just wanted to say I'm not trying to avoid a penalty. I'm just trying to survive.
425 helpful answers
One option is for your mother to deed her interest in the house to you, IF you have cared for her in the same house for at least a two-year period preceding her entering a nursing home, and IF your care enabled her to postpone going into a nursing home. If you meet the requirements and can document everything, then her transfer to you of her interest in the house would not be a gift. That way you can protect the house from a future Medicaid reimbursement claim.
425 helpful answers
If both parents are in the nursing home, they are only permitted a TOTAL of $3,000 between the two of them. Yes, they can have up to that amount in their bank account.
I am tryiing to get a strategy together for my mother. She is still independent living in her home while her husband is living in a Nursing home. We are trying to determine if she should stay in this home or she needs to think about selling her home and moving to a smaller place. Also, they have assets that are not in a trust. We were told by the lawyer to put them in the trust to avoid probate. How do we protect the house? She is fearful of losing it during these Guardianship proceedings over her husband.
425 helpful answers
There are number of important issues you bring up:
*Using a trust to protect assets yet qualify for Medicaid
*Avoiding estate recovery (when the state files a claim for reimbursement of their Medicaid payments after the recipient dies)
*Protecting the house and other assets
There are too many issues and variables for me to discuss here. I think at this point it would be really beneficial for you to read my book, which covers all of these! "How to Protect Your Family's Assets from Devastating Nursing Home Costs: Medicaid Secrets" (

Good luck with everything!

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