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Naples Elder Law Lawyer Explores Medicaid Penalties

Elder Couple with Lawyer

There is a lot for a Medicaid applicant to understand when it comes to applying for Medicaid benefits. One of the more significant topics to understand is Medicaid penalties and how they can affect your ability to qualify for Medicaid. If you do your Medicaid application planning well in advance, then the penalties are not quite as intimidating. But if you waited until it was time for you or your loved one to transfer to assisted living to submit your application, then you could be looking at penalties.

Look-Back Period

When you apply for Medicaid, there is a look-back period of five years that starts the day you submit your application. During the look-back period, Medicaid is trying to see if there were any assets you gave away that could have been used to pay for your assisted living arrangement. If you did give away significant assets thinking you were saving them from Medicaid, then you will face Medicaid penalties. It is important to remember these penalties do not equal five (5) years.

For example, if you gave your child a cash gift of $40,000.00 four years ago and the average cost per month for assisted living in your state is $5,000.00, then Medicaid will delay your application approval by eight months. This penalty will apply each time Medicaid finds assets you gave away that should have been kept in anticipation of your long-term care needs.

Protecting Certain Assets

If a Medicaid applicant has a special needs child under the age of 21 when the application was submitted, then the applicant can set up a special trust for that child and put their assets in that trust. The assets become the property of the special needs child, but Medicaid is not allowed to seize those assets as part of its look-back period.

Exemptions From Penalties

Some assets of a Medicaid applicant are simply exempt from the penalties applied during the look-back period. For example, a person applying for Medicaid can transfer cash assets to their spouse without penalty so long as the spouse is not applying for Medicaid. You should talk to an elder law attorney about the maximum amount that can be transferred for the year you are in.

If a Medicaid applicant has a spouse who has preexisting equity in the applicant’s real estate holdings, then Medicaid allows the applicant to transfer the deed to those properties without penalty.

Medicaid penalties can be costly and sometimes hard to understand. Our firm has years of experience in handling the Medicaid application process for a wide variety of situations. We offer Naples residents the most comprehensive crisis and non-crisis Medicaid application services in the area, and we are ready to be the legal team that helps you to preserve your assets and avoid costly Medicaid penalties. The Mattar Firm can help you protect all of your assets through our exclusive asset protection trust, while allowing you full control over your assets.

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