The Medicaid program is the most significant source of potential government financial assistance for families struggling to meet the cost of long term care.
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 can be ineligible for those benefits if he or she 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 was transferred for less than fair consideration within the look-back period, then a period of ineligibility is imposed based on the uncompensated value of that transfer.
New Penalty Divisor for 2015
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. As of January 1, 2015, the penalty divisor will be set at $293.15 per day. This means that the Department of Human Services (formerly Department of Public Welfare) has calculated that the average monthly nursing facility private pay rate in Pennsylvania is $8,916.65 a month.
Uncompensated transfers made during the look-back period will be calculated at one day of ineligibility for every $293.15 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 may want to consult with an experienced elder law attorney before completing the transaction.