In Pennsylvania, in 2012 over $7 billion was spent by
Medicaid on long-term care services and supports. Nearly 50% went for nursing
facility care while 41% was paid for home and personal care services. See: Distribution
of Medicaid Spending on Long Term Care, Kaiser Family Foundation State
Health Facts.
Qualification for Medicaid long-term care benefits is
critical to meeting the care needs of many of Pennsylvania’s most frail elderly.
But, an applicant is ineligible for those benefits if he has disposed of assets
for less than fair market value during a five year look-back period.
Imposition
of a transfer penalty denies benefits for individuals who otherwise need and
qualify for Medicaid long term care benefit. A denial can also effectively make
an individual’s children liable for the costs of the needed care. See: Children
can be liable for a parent’s long term care costs in Pennsylvania.
The transfer penalty applies when a transfer was made by the
individual applying for Medicaid long-term care benefits, or their spouse, or
someone else acting on their behalf.
Unless the transfer is for some reason exempt, if an asset is
transferred for less than fair consideration within the applicable look-back
period, then a period of ineligibility is imposed based on the uncompensated
value of that transfer.
New Penalty
Divisor for 2014
The length of the penalty period is calculated by taking the uncompensated
value of the transfer and dividing it by the average private patient cost of nursing facility care in
Pennsylvania at the time of application for benefits. The average cost to a
private patient of nursing facility care is often referred to as the “private
pay rate” or the “penalty divisor.”
The penalty divisor is revised each year as nursing facility
care costs increase. The Pennsylvania Department of Public Welfare has announced
that as of January 1, 2014, the penalty divisor will be set at $288.21 per day.
This means that the Department has calculated that the average monthly private
pay rate in Pennsylvania is $8,766.39 a month (or $105,197 per year).
Uncompensated transfers made during the look-back period will
be calculated at one day of ineligibility for every $288.21 transferred away. In
Pennsylvania, transfers penalties will be imposed when the value of transfers
made in a month exceeds $500.
The rules
are complicated. Seniors considering making gifts or other transfers of assets
should consult with an experienced elder law attorney before completing the transaction.
