WHEN IS THREE YEARS NOT THREE YEARS
by Judith Sterling
In Hawaii there is a “lookback” period of 36 to 60 months when a person applies for nursing home Medicaid.
During that time period any transfer made for less than fair market value (usually gifts) can result in a penalty period
in which the person applying for Medicaid is denied Medicaid. Transfers directly to individuals result in a 36-month
“look back” period. Here are several scenarios. The question is: “When, if ever, does Mom become eligible for
Medicaid Benefits?” As in school exams, ignorantia legis non excusat. (ignorance of the law is no excuse.)
- Mom gave $80,000 to her daughter 12 months ago.
- Mom gives all of her money ($80,000) to daughter today. Mom enters a nursing home tomorrow and applies
for Medicaid.
- In December of 2000, Mom gave daughter $300,000. Mom enters a nursing home tomorrow and applies for
Medicaid.
- In December, of last year, Mom gave daughter $300,000. Mom enters a nursing home tomorrow and applies
for Medicaid.
- In December of last year, Mom put daughter’s name on her $300.000 house as a joint tenant with Mom.
Mom enters a nursing home tomorrow and applies for Medicaid.
The analysis begins as of the earliest day on which Mom is both in the nursing home and has applied for
Medicaid. This is known as the “snapshot” or “trigger” date. The Medicaid eligibility worker looks at her assets as of
this date and looks at all transfers made for less than fair market value for the prior 36 months, if the transfer are
made directly to individuals. In Hawaii, if Mom is married, her spouse is able to keep $95,100 of countable assets in
2005 under the Spousal Impoverishment Provisions of the Medicaid law and she is able to keep $2000 in countable
assets. If she is single, then she will have to spend her assets down to $2,000 in Hawaii.
Certain assets are exempt in Hawaii. They include, with some limitations, a residence, vehicles, burial plots,
bone fide burial plans, engagement and wedding ring, furnishings, $1500 in cash value in life insurance.
Other assets are countable. The “trigger” or “snapshot” date opens a window backwards of 36 months through
which the Department of Human Services (DHS) in Hawaii may identify gifts. (The window for transfers to trusts is
60 months.) The DHS eligibility worker then divides the value of each gift by the state- mandated average monthly
cost of nursing home in Hawaii. This number is currently $7314. This is used to determine the number of months
that Mom is penalized, that is, unable to qualify for nursing home as the result of the gift. The ineligibility begins on
the first day of the month in which the gift was given. The rest is arithmetic. Although, when there are multiple gifts
the situation gets much more complicated. Also, strategies can be developed to allow for fast gifting programs with
minimum penalty periods.
Answers:
- Not yet. Mom has not applied.
- In Hawaii not for 10 months (i.e. $80,000 divided by $7,314 per month penalty equals over
10 months and is rounded down to 10 months.)
- Immediately. The gift is not in the 3-year look back window.
- In Hawaii 41 months from last December, because she applied during the 3-year look back period.
- This is a gift of $150,000, resulting in a penalty in Hawaii of 20 months from the date of the gift.
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