Morrison Law Group, PLC

Estate Planning | Business Planning

Attend a Free Workshop SCHEDULE A CONSULTATION

Offices in Metairie & Covington (504) 831-2348

  • Home
  • Our Firm
    • About Our Firm
    • Attorney and Staff Profiles
    • Estate Planning Pre-Consultation Form
    • Reviews
      • Our Reviews
      • Review Us
    • Request a Guest Speaker
    • Succession Pre-Consultation Form
  • Estate Planning
    • Asset Protection
    • Estate and Gift Tax Figures
    • Estate Planning Services
    • Incapacity Planning
    • Legacy Planning
    • Pet Planning
    • Probate and Successions
    • SECURE Act
    • Special Needs Planning
  • Medicaid Planning
    • Medicaid & Nursing Home Planning
    • Free Medicaid/Long-Term Care Calculator
  • Business Planning
    • Business Planning
    • Business Succession Planning
    • Family-Owned Businesses
    • Small Business Medicaid Planning
  • Resources
    • Estate Planning Resources
      • Estate Planning Definitions
      • Estate and Gift Tax Figures
      • Estate Planning Reports
      • Estate Planning Checkup
      • Is Your Estate Plan Outdated?
      • Incapacity Planning Definitions
    • Elder Law Resources
      • Are You A Caregiver?
      • Coping With Alzheimer’s
      • Guardianship & Conservatorship
      • Hospice Care
      • Elder Law Reports
      • Elder Law & Medicaid Definitions
    • Newsletters
    • Trust Administration & Louisiana Succession Resources
      • Bereavement Resources
      • The Mourner’s Bill of Rights
      • Things You Need To Do When a Loved One Passes Away With a Trust
      • Things You Need To Do When a Loved One Passes Away With a Will
      • Trust Administration & Probate Definitions
      • How to Know if You Need Extra Help With Your Grieving
      • Loss of a Loved One
    • Families of Children with Special Needs
    • Frequently Asked Questions
      • Estate Planning FAQ’s
      • Trust Administration & Probate Frequently Asked Questions
      • Legacy Wealth Planning FAQ’s
      • Frequently Asked Questions for Families Without an Estate Plan
  • Blog
  • Contact Us

Lowering Your Chances at Qualifying for Medicaid? Know the Law before Transferring an Asset

February 8, 2021 by Ronald "Chip" Morrison

Estate Planning is often a necessary task.  It is most commonly known as a way to direct your assets to those you wish to provide for after your death.  But, did you know that part of the estate planning process could also help with providing for your care or the care of a loved one upon disability?  A well thought out estate plan can prove especially useful where a beneficiary may need government assistance, such as SSI or Medicaid.  A hasty transfer of assets can mean the difference between receiving the government’s help or being on your own.

Each state determines its own requirements.  In order to qualify for Medicaid benefits, the applicant must generally be elderly, disabled, or blind and have insufficient income and resources to pay for his or her medical expenses.  However, a medically needy applicant with sufficient income and resources, who meets all other Medicaid eligibility requirements, can still qualify.  The excess income and resources must be used towards medical expenses to qualify.

Spend Down Strategy

A properly executed “spend down” strategy may be successfully used to qualify.  As indicated by its name, this requires the applicant to spend excess income on medical or other various expenses in order to meet Medicaid thresholds.  Examples of legitimate uses include:

  1. Paying down or paying off a mortgage;
  2. Purchasing home furnishings;
  3. Making home improvements;
  4. Purchasing a new car or making necessary car repairs;
  5. Prepaying real estate taxes (if non-refundable);
  6. Paying for legal services relating to qualification for government assistance.

This list is not exhaustive.  However, it is important to note that states are not required to allow applicants to spend down excess resources.  Therefore, the success of a spend-down strategy depends upon the applicant’s state of residency and the requirements the state has adopted.

Transfer of Assets

Applicants with excess resources may also think all that is needed to qualify for assistance is to transfer excess resources to a family member or friend in order to fall within the Medicaid limits.  Unfortunately, this strategy may prove fatal, as certain transfers will result in complete disqualification.

Medicaid includes what is called a “look-back period” where the applicant’s actions are scrutinized to determine eligibility.  The look-back period can be 36 or 60 months (dealing with transfers to certain types of trusts) from the time an applicant submits an application for government assistance.  Once the application is made, all asset transfers that occurred for less than full and adequate consideration within the look-back period are considered when determining Medicaid eligibility.  Therefore, a strategy that requires the applicant to make gifts of assets, or to sell assets below fair market value, will result in the disqualification of the applicant from Medicaid assistance for a certain period of time.  The amount of time the applicant will be disqualified is 36 or 60 months from the time of the transfer, or for a period of time, it would have taken the applicant to spend down the monthly nursing home cost if less.

However, not all asset transfers within the look-back period are ignored for determining eligibility.  Transfers to a spouse and transfers to blind or disabled children are excepted from the look-back period.  Nonetheless, if you’re thinking you can transfer excess assets to a spouse or blind or disabled child who will then transfer the assets to a third party for less than adequate consideration, the government may be one step ahead of you.  Many states ignore transfers of this sort for eligibility purposes and treat the transfer as if it was made directly by you to the third party.

Consult with a Qualified Estate Planning Attorney

The laws dealing with Medicaid eligibility and Special Needs Planning are complex.  Without the proper advice, an otherwise simple transaction, (such as making a gift to a relative), can result in the temporary disqualification from valuable Medicaid benefits.  Consult with a qualified estate planning attorney who is familiar with Medicaid planning.  Otherwise, your well-being or that of a loved one may be at risk.

Mr. Ronald “Chip” Morrison, Jr. is a Board Certified Specialist in Estate Planning and Administration by the Louisiana Board of Legal Specialization and a member of the American Academy of Estate Planning Attorneys. He has been engaged in estate planning and elder law matters for more than 16 years throughout southern Louisiana and can prepare an estate plan for you that achieves your goals of passing your assets to whom you wish and make sure that your selection of guardians for your children is heard by the court. For more information or to attend an upcoming seminar, please call our Metairie office at (504) 831-2348 or contact us through our website.

  • Author
  • Recent Posts
Ronald
Ronald "Chip" Morrison
Ronald “Chip” Morrison, Jr. is a Board Certified Estate Planning Law Specialist as certified by the Louisiana Board of Legal Specialization. He is admitted to practice before all State courts in Louisiana. He is also admitted to practice before the United States District Court for the Eastern and Middle District of Louisiana.
Ronald
Latest posts by Ronald "Chip" Morrison (see all)
  • How to Leave a Mess to Your Heirs - January 30, 2023
  • A Plan by Design or by Telephone? - January 27, 2023
  • Planning to Benefit Non-Traditional Beneficiaries - January 24, 2023

About Ronald "Chip" Morrison

Ronald “Chip” Morrison, Jr. is a Board Certified Estate Planning Law Specialist as certified by the Louisiana Board of Legal Specialization. He is admitted to practice before all State courts in Louisiana. He is also admitted to practice before the United States District Court for the Eastern and Middle District of Louisiana.

Morrison Law Group, PLC

Subscribe Our Blog

Map

Morrison Law Group PLC (Metairie Office)MAP Gabb Morrison LLP (Covington Office)MAP
  • Facebook
  • Instagram
  • LinkedIn
  • Pinterest
  • RSS
MORRISON LAW GROUP
law-pay

© 2023 American Academy of Estate Planning Attorneys, Inc. | Disclaimer | Privacy Policy