What Are the Rules for Medicaid Qualification (Part 5)?

As in part four of our series, your Medicaid planning advisor can best help you determine how the rules apply to your specific circumstances in your specific locality. Before you get into the specifics, however, it’s a good idea to familiarize yourself with the general federal guidelines for Medicaid qualification that apply everywhere.

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Do I Have to Wait 60 Months?

The Asset Transfer "Box”

Many people believe that if you give your assets away, you must wait 60 months to qualify for Medicaid. This is not the case. The 60 month requirement only applies to the financial disclosure you must provide, not eligibility.

Think of it this way: When you go to apply for Medicaid, imagine you’re bringing a box with you. In that box is every financial transaction you’ve made for the previous 60 months. That is all you need to provide – if you made a transaction 61 months ago, it’s not in the box. So 60 months is just the size of the “box”...it’s that simple.

However, this has nothing to do with determining your qualification for Medicaid. It is what Medicaid sees in the “box” that determines whether you will qualify. If you make the proper planning decisions, you may qualify immediately even if the “box” contains information that might otherwise make you ineligible for Medicaid.

This 60 month period is what is referred to as the Medicaid “look back period.” With appropriate planning and expert assistance, you can give yourself the best opportunity to qualify for Medicaid coverage when you need it.

Look-Back Exceptions

You can make certain asset transfers without negatively affecting your prospects for timely Medicaid qualification. These include transfers to:

• a spouse
• a child who is blind or disabled
• trusts that benefit a blind or disabled child
• trusts that solely benefit a disabled person under the age of 65 (in some cases, the recipient)

What is a Penalty Period?

The penalty period for nonexempt transfers (non-allowed transfers within the 60 - month period) is calculated by dividing the total value of all property transferred by the average monthly cost of nursing home care in your area.  The State of Michigan determines this “average” each year.  For 2022, the penalty divisor is $9,880.00.

For example, if a Michigan resident transferred $98,800.00 and applied for Medicaid in 2022, the penalty period for that transfer would be 10 months ($98,800.00 divided by the average monthly cost of $9,880.00 in Michigan). 

Give yourself the best opportunity to qualify for Medicaid coverage. Check back, for additional information, as we continue our series - What Are the Rules for Medicaid Qualification? To start at the beginning of our series, click here.

Learn more about applying for Medicaid in Michigan here.

The Cost of Long Term Care Means That Medicaid Can Apply to You, Even if You Currently Believe It Doesn’t

Questions? Contact Us Today (248) 278-1511

This article, in our series regarding Medicaid qualification rules, by Michigan lawyer Nicole Wipp and the Family & Aging Law Center PLLC is not, and should not be construed as, legal advice. It is for general informational purposes only. To better understand how this legal concept can be applied to you, consult with an attorney.