Answer:

You can usually give assets away, even if you are already in the nursing home, as long as you do not run afoul of the State’s rules. If you meet the State’s rules, the State will pay; if you don’t meet the State’s rules, the State won’t pay. It’s that simple.

The asset transfer rules generally provide that for every $9,464 (indexed annually for inflation) a person gives away, they are ineligible for Medicaid benefits for one month. A gift of $18,000, therefore, results in a two month ineligibility period. These ineligibility periods are referred to as “penalty periods.” The penalty rules apply to gifts of money, real estate, cars, and to anything of value. Penalty periods, as a result of the 2006 Federal rule change, start to run on the date a person is “otherwise eligible” for Medicaid. This usually means when the person is in a nursing home and has assets, of $1,600 or less.

In the 2005 Connecticut legislative session, the State passed the so-called “Transfer Liability Act.” This new law provides that any gift that results in the imposition of a penalty period is presumed to have been made for Medicaid qualification purposes. Any such gift creates a debt owed to the State by the transferor or transferee (the maker or the recipient of the transfer). The amount of the debt is equal to the lesser of the cost of care paid for by the State after the transfer date or the amount of the transfer. It is still unclear whether and how the State will enforce this law. The impact of this law is significant to people who receive gifts and should be discussed with a qualified attorney.