Beware of Medicaid Asset Transfers: You Could Find Yourself in Court

yield-sign-1340780-mIn 2013, a new statute went into effect that can enable nursing facilities to sue you or your family for outstanding debts.

What could this mean for you?

It means that when you are considering making transfers or gifts a part of an asset protection plan, or in anticipation of applying for Medicaid, you run a higher risk of finding yourself facing nursing home litigation.

The statute outlines that the nursing facility can collect on the debt providing:

  • The resident was subject to the assessment of a penalty period, which is a period of Medicaid eligibility imposed by the Department of Social Services;
  • The debt recovery does not exceed the fair market value of the transferred asset at the time of transfer;
  • The asset transfer that triggered the penalty period took place not earlier than two years prior to the date of the resident’s Medicaid application; and
  • The nursing facility is only permitted to bring an action against the transferor or the transferee.  Note that a conservator who transfers income or principal with the approval of the probate court is not subject to liability under this statute.

If, on the other hand, the nursing facility is successful in its lawsuit, it will be awarded actual damages, court costs, and reasonable attorneys’ fees. Prior to reaching its conclusion, the court will determine whether there is clear and convincing evidence that a defendant incurred a debt to the nursing facility by

1) willfully transferring assets that are subject of a penalty period;

2) receiving such assets with knowledge of such purpose; or

3) making material misrepresentation or omission concerning such assets.

If the defendant is successful in defending the lawsuit, he or she is entitled to be reimbursed for court costs and/or reasonable attorney’s fees.

Now, more than ever, you need to take special precautions when considering asset transfers. This statutory cause of action heightens the degree of scrutiny that will be placed on all transfers, which means you run a higher risk for potential nursing home litigation.

Don’t take the risk, contact us before transferring any of your assets.

Related Posts:

Be Careful: Transferring Assets to Qualify for Medicaid in Connecticut May Backfire
3 Things You Should Know About Medicaid
Annuities as Asset Protection for Couples: Smart Move If You Do It Right

4 Medicaid Catastrophes You Can Avoid

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