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A Medicaid professional consultant helping an elderly woman to protect her assets and money from the nursing home spend down.

How to Avoid the Nursing Home Spend Down

Gifting Rules Transfer Assets at Fair Market Value

Most of the Medicaid myths pertain to the gifting rules for transfer of assets. So, if there is a transfer of assets done solely to qualify for Medicaid, that individual will be subject to a period of ineligibility. The only way around this is if the person who made the transfer has received fair market value for the assets that were transferred. For example, if Dad gave his house to his son for the amount of $2,000, he would have to complete the period of ineligibility because the house was not transferred at fair market value. On the other hand, if the house were sold for $150,000, Dad would then have too much money to be able to qualify for Medicaid. It seems like a catch twenty-two. No matter what is done, many people will not be eligible for Medicaid when they first apply.
Another example used to clarify this myth is the following. If a mother gives a $20,000 gift to a child in order to qualify for Medicaid, she will have to wait the ineligibility period. However, if this money was transferred and used to pay off debt, the period of ineligibility does not apply. The rules about asset transfers are very complicated, which is why anyone applying for Medicaid should consult with an attorney to determine eligibility and how to rearrange and reorganize assets.
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