starts to run as of the first day of the month for which the applicant is seeking benefits. So, for example, if an applicant gave away $101,900 four years before applying for Medicaid benefits by paying for her grandson’s college tuition, and through financial misfortune and a health downturn applied for nursing home benefits as of the fourth year and eleventh month following the gift, she would still be ineligible for a period of 10 months because of the gift. Transferring assets for purposes of protecting them from long-term care costs is a delicate proposition. There are tax disadvantages associated with gifting assets away, and in some cases the gift recipient may squander the assets in a short period of time. An experienced and knowledgeable elder law attorney can be invaluable in helping the older person to understand all the pros and cons associated with making gifts and to design a plan that best suits the (such as rent, mortgage, property taxes and homeowner’s insurance, plus a preset amount for utilities) exceed the federally set housing expense allowance, which is currently $739.50. How does the ‘lookback’ period work in relation to Medicaid planning, and what are its implications for asset transfers for seniors’ financial planning? On the Medicaid application there is a question that asks if the applicant or his or her spouse has made an uncompensated transfer within the last five years. An uncompensated transfer is essentially a gift, but can apply to any transfer where the person who made 30 LAWYER MONTHLY OCTOBER 2023 the transfer did not receive adequate compensation for the property that was transferred. If the answer to the question is yes, the next question on the application asks how many uncompensated transfers there were. From there, the amount of the uncompensated transfer is divided by $10,190. This number is called the penalty divisor. It represents the average cost per month in a nursing facility in the state and is published by the state annually. The result of that analysis is to arrive at the number of months that the applicant could have paid for nursing home care but for the gift (i.e. the ‘uncompensated transfer’). This number becomes the number of months that the applicant for Medicaid is not eligible for benefits and is known as the penalty period. Importantly, the period does not start to run on the date of the gift; rather, it
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