Hunziker, Jones & Sweeney, P.A.
Attorneys at Law
Wayne Plaza II, 155 Route 46 West, Wayne, NJ 07470 Tel: (973) 256-0456 Fax: (973) 256-4784

Medicaid Penalties

Transfer of Assets and Medicaid Penalties

What creates a Penalty under Medicaid? That is one of the most frequently asked questions for an elder law attorney. Penalties can inadvertently be created by any number of elections made by individuals during the estate planning process. This may include gifting away of assets to children and the deeding of a home to a party other than one's spouse. A penalty could be created if the medicaid applicant irrevocably waives his or her rights to income or an inheritance. A nursing home bound spouse who fails to file for a spousal elective share upon the death of the community spouse can create a penalty period. The refusal to take legal action to obtain a court ordered payment such as child support or alimony may create a penalty period. There are many additional actions or inactions taken by the applicant that may create a penalty and deny the applicant Medicaid benefits.

There are also exceptions or special circumstances where transfers would not affect Medicaid eligibility. There are a number of permitted transfers that one can make, which would shield an individual from a potential medicaid penalty and the recapture of assets by Medicaid. Experienced elder law attorneys utilize these exceptions to benefit their clients and pass along assets to the next generation, if this is the goal of the client and in his or her best interests.
By way of example, acceptable transfers include:

  • Transfers to one's spouse
  • Transfers to a child under the age of 21
  • Transfers to a child of any age who is blind or totally and permanently disabled
  • Transfers to a brother or sister, who already had an equity interest in the home prior to the transfer and who was residing in the home for a period of at least one year immediately before the individual became institutionalized
  • Transfer to a caretaker child who has lived with the parent for at least two years and has provided care for the parent such that it permitted the individual to reside at home rather than in an institution or facility, that transfer is permitted. 
  • Transfers to a trust established for the sole benefit of an individual under 65 years of age who is disabled, that transfer will not create a penalty period.

For more information, contact us at info@hjslawoffice.com
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Hunziker, Jones & Sweeney, P.A., is one of the largest law firms in Passaic County specializing in Banking & Finance Law, Bankruptcy, Business Law, Collections, Commercial Litigation, Commercial & Residential Financing, Corporate Law, EDA & SBA Financing, Elder Law, Estate Planning, Estate and Trust Administration, Family Law, Guardianship & Conservatorships, Landlord Tenant, Municipal Law, Probate Litigation, Real Estate, State & Federal Court Litigation, Taxation Law, Transportation Law, and Zoning & Land Use. Hunziker, Jones & Sweeney P.A. serves clients in both upper and lower Passaic County, as well as Bergen, Essex, Hudson and Morris Counties.