General Rules for Transfers of Assets

Gifting or transferring assets by a Medicaid applicant or spouse, for less than fair market value, within 60 months (five years) immediately prior to filing the Medicaid application, create a period of ineligibility for Medicaid. The period of ineligibility or “penalty period” is the period when an applicant is not eligible to receive Medicaid benefits. This period is determined with the following calculation:


Uncompensated value of the transferred property

__________________________________   =   Penalty Period in months  

               Monthly regional rate for care


For example, in the Rochester Region an “uncompensated” transfer of $60,000 in assets to anyone other than your spouse would result in a 5-month period of ineligibility (60,000 ÷ $11,237.00 = 5.34).  You must therefore wait 5 months before qualifying for Medicaid (the “remainder” of $3,815 is treated as an available resource in the first month of eligibility and added to the amount that must be paid to the nursing home that month).

This 5-month penalty period does not begin to run until after you are in a skilled nursing facility and would otherwise meet the resource levels to be eligible for Medicaid coverage.

If you need skilled nursing care within 60 months of making this uncompensated transfer, you must “private pay” – presumably from the resources of a family member or your otherwise “exempt” resources – for the care until the 5-month period following the transfer and date of application have elapsed.

However, with proper legal advice, it is possible for an individual to make substantial gifts within the 5-year period prior to entering a nursing home, or even after entering a nursing home, and legally qualify for Medicaid.