Medicaid law limits the ability of an individual to give away their assets in order to meet the resource level required for Medicaid help in paying for nursing home care or Medicaid funded Home and Community-Based Services. It imposes a period of ineligibilty for benefits if assets have been given away during the preceding five years.
However, the law that penalizes transfers of assets includes a number of exceptions. One important exception applies to transfers that are made by a parent to his or her disabled child. 42 U.S.C. § 1396p(c)(2)(B)(iii) provides that “An individual shall not be ineligible for medical assistance by reason of [the transfer penalty rules] to the extent that . . . the assets were transferred to, or to a trust . . . established solely for the benefit of, the individual’s child described in subparagraph (A)(ii)(II) [which describes blind and disabled children].”
Recently, the Pennsylvania Department of Public Welfare (DPW) issued a policy clarification to help clear up any confusion about this exemption among caseworkers at County Assistance Offices. The DPW Policy Clarification (PMN15789440) was dated May 18, 2011. It answers four key questions:
1. Can assets be transferred to an individual's disabled child?
2. Is there an age limit for the individual’s disabled child?
3. If assets are transferred will a penalty period be imposed?
4. Could the asset transfer affect the eligibility begin date?
The answers given by DPW’s Division of Health Services are as follows:
1. Yes, assets (income and resources) may be transferred to an individual’s child, who is disabled per Social Security (SS) standards for the sole benefit of the child. The disability must be documented.
2. No, there is no age limit for the individual’s disabled child, including an adult child.
3. No, a penalty period will not be imposed if the asset is transferred to an individual’s child who is documented as disabled per SS standards.
4. Yes, if an individual applying for Medical Assistance (MA) and payment of Long Term Care (LTC) services must reduce resources to be eligible, it could affect the begin date of eligibility, if the assets are transferred to an individual’s disabled child. I.E. Mr. B is requesting MA LTC effective 2/15/11 and has resources totaling $15,000. He has a child, who is documented as disabled per SS standards. On 2/28/11, he transfers $8,000 to his child for the child’s benefit. Mr. B would be eligible for MA LTC on 3/01/11 if all other conditions of eligibility are met.