When you need long-term care at home or in a facility the
costs can be staggering. That is why qualifying for government benefits through
Medicaid is crucial to the financial, physical and emotional health of so many
seniors and their families.
Unfortunately, qualifying for Medicaid long-term care
benefits can be very difficult. One of the obstacles is the so-called “transfer
penalty.” A period of ineligibility for benefits (transfer penalty) is imposed
if an applicant 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 would qualify for Medicaid long term-care coverage.
A denial can also effectively make an individual’s children liable for the
costs of the needed care. See: Law
Can Require Children to Pay Support for Aging Parents.
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 2020
The length of the penalty period is calculated by taking the
uncompensated value of the asset 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, 2020, the penalty divisor is set at $352.86
per day. This means that the PA Department of Human Services has calculated
that the average monthly nursing facility private pay rate in Pennsylvania is
$10,732.83 a month. [Please note that the penalty divisor is different in
states other than Pennsylvania].
Uncompensated transfers made during the look-back period will
be calculated at one day of ineligibility for every $352.86 transferred away.
In Pennsylvania, a transfer penalty 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 are well advised to consult with an experienced elder law attorney before
completing the transaction. If you live in Pennsylvania you can contact
the elder law attorneys at Marshall,
Parker and Weber for more information.