The Medicaid program is the most significant source of government payment toward the cost of long-term care. It is critical to meeting the care needs of many of Pennsylvania’s frail elderly. But you may be ineligible for those benefits if you or your spouse has disposed of assets for less than fair market value during the prior five year "look-back"period.
Imposition of a transfer penalty can result in a denial of benefits for individuals who desperately need and would otherwise qualify for Medicaid help in paying for long-term services and supports. And, since Pennsylvania has a filial responsibility law, a denial can 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 penalty applies to transfers 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 2016
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. Effective January 1, 2016, the penalty divisor will be set at $302.42 per day and $9,198.61 per month. ($302.42 x 365 / 12 = $9,198.61). These 2016 divisor amounts represent an increase of approximately 3% from the 2015 figures of $293.15 and $8,916.65.
Uncompensated transfers made during the look-back period will be calculated at one day of ineligibility for every $302.42 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.
Understanding Medicaid's Five Year Look-Back Period
If You Need Long-Term Care You Need to Understand Medicaid