Prohibited Transfer of Assets

Prohibited Transfer of Assets Among Family Members and How This Affects Medicaid Eligibility for Nursing Home Patients

We recently received a follow-up letter to a previous blog we had written about the Monthly Maintenance Needs Allowance. This letter explains a situation where a prohibited transfer of assets occurred, which can greatly affect the Medicaid eligibility for someone who is an assisted living or nursing home facility. Below is the letter and our explanation of the impacts that such a prohibited transfer can have.

Dear Nursing Home Guy,

Recall my father was able to (in your words) reach over into my mother’s purse and give her money to my father. So as a follow-up to my previous letter, my father recently passed. But prior to his death, he had been getting my mother’s money for his benefit and paying his bills. I just found out that my brother had not told the nursing home that my father had died, and that my brother had been taking money that was supposed to be going to the nursing home for my mother’s care. You previously told me that we could take money from mom’s purse for my father’s sole benefit. And now that he’s dead, my brother has just helped himself to my mother’s income for the last 7 to 9 months. I also found out that just before my dad died, he transferred his home to my brother. I want my mom to be taken care of and I don’t want the nursing home to be coming after me because I can’t afford it. So I want to recover this money and property for my mother. How can you help?

Concerned Son

Wow! That’s a lot happening in your world and, again, I’m sorry you’re having to go through all this. Sorry to hear of your dad’s passing and sorry to hear of the issues that have arisen with your brother. Recall that with Medicaid eligibility, your mom’s income was her income and your dad’s income was his income. Because of the anti-impoverishment rule that we discussed in that last blog, your dad was able to reach into mom’s purse, get her money, and put it in his pocket to pay for his bills.

The Monthly Maintenance Needs Allowance is no longer applicable now that dad has passed. So now your mother has this income that belongs to her and not your father. Since your father died, your brother has taken the money (a prohibited transfer) and we don’t know what he did with it. We don’t know how much money he has taken, but that doesn’t really matter. What matters is that he took it. That money belongs to your mom and needs to be paid to the nursing home.

The other issue here is that your dad transferred the home to your brother. The home was considered an exempt asset while your mother is receiving Medicaid and when your dad was alive. Your brother is not an exempt recipient, so that’s a prohibited transfer of assets. So not only do we have a prohibited transfer of income, we have a prohibited transfer of property as well.

Medicaid policy provides that your mom’s income belongs to her. And since she hasn’t paid any of that income to the nursing home, she can be penalized for that. As a result, her Medicaid could be revoked. Likewise, the transfer of the house to your brother is another prohibited transfer for Medicaid purposes that could result in her benefits being revoked.

Consequences of a Prohibited Transfer

So what happens when Medicaid is revoked as a result of a prohibited transfer? Medicaid will impose some kind of penalty divisor until the money is paid to the nursing home. It’s basically a penalty that is imposed by Medicaid and makes an individual ineligible for Medicaid benefits until that money is paid back and the prohibited transfer has been resolved.

Let’s take a look at an example with numbers to explain this further. We’ll assume the house is worth $88,000 and that was the value of the house when your dad transferred it to your brother. The penalty divisor for Georgia Medicaid this year is $8,821. So you would take the value of the house ($88,000), divide that by $8,821, and that results in 10 months of penalty. Your mom would then be ineligible for any Medicaid benefits over the next 10 months, and she would have to “private-pay” her nursing home stay over that time.

Private pay is extremely expensive! The average monthly cost for a nursing home stay in South Georgia is $10,000 to $11,000 per month. Your mom doesn’t have the income or assets to afford that, so this is a very significant problem. The income your brother took would also incur a penalty divisor. Let’s say he took $24,000. That would mean a three month Medicaid ineligibility period unless he pays the money back to the nursing home.

As you can tell, there are several violations that have occurred here. Your brother needs to pay the money back. That money belongs to your mom. He didn’t earn it, your mom was not capable of giving it to him, and he isn’t considered an exempt recipient by Medicaid definitions. If the Medicaid folks get wind of this, they will certainly revoke your mom’s benefits and make her private pay for her nursing home care.

If your mom is unable to private pay for her nursing home stay, and it sounds like she isn’t based on her income, then she would be discharged with nowhere to go. She’s not capable of taking care of herself. Maybe your are able to take care of her, but it certainly sounds like your brother couldn’t handle that responsibility. You have some serious problems here and you should give us a call (229-226-8183) so we can communicate with you on a more confidential basis.

Contact Us So We Can Help

We’ve dealt with these types of situations many times. If you are having issues with the prohibited transfer of assets among family members, please call us (229-226-8183) or send an email to [email protected]. You’ll want to handle these types of issues as quickly as possible before your loved one loses their Medicaid eligibility as a result of the prohibited transfer. We’re here to help you and your family protect and preserve assets for your long-term health and well-being. You can also COMPLETE THIS FORM and we’ll contact you to schedule an appointment. If you’d like to see this blog in video format, you can watch it below. Please be sure to SUBSCRIBE to our YouTube channel and click the bell notification button so that you’re notified each time we publish a new video.