Planning for Medicaid Eligibility in Hawaii: Look Back and Penalty Periods.
When Is Three Years Not Three Years?
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.*
1. Mom gave $80,000 to her daughter 12 months ago.
2. Mom gives all of her money ($40,000) to daughter today. Mom enters a nursing home tomorrow and applies for Medicaid.
3. In January, 1999, Mom gave daughter $400,000. Mom enters a nursing home tomorrow ( October 31, 2002) and applies for Medicaid.
4. In December 2000, Mom gave daughter $400,000. Mom enters a nursing home tomorrow (September 10, 2002) and applies for Medicaid.
5. In March of 2002, Mom transferred ½ of her $125,000 house to her daughter as a tenant in common. Mom enters a nursing home tomorrow (September 10, 2002) 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. Medicaid looks at her assets as of this date. If she is married, then the rules under the Spousal Impoverishment Provisions apply.
If she is single, then she will have to simply spend her assets down to $2,000.
Certain assets are exempt, that is, Mom can own these assets and still qualify for Medicaid.
They include the following:
Residence
Vehicle
Personal Property
Pre-paid Funeral Plan worth $1500 or less
Life insurance with no cash value
Funeral Plot
Most other assets count. The trigger or snapshot date opens a window backwards of 36 months through which Department of Human Services in Hawaii may identify transfers without adequate consideration (gifts). (The window for transfers to trusts is 60 months.) If there are overlapping gifts the Medicaid agency then combines all the gifts that fall within the window and divides the total by the state-mandated average cost per month for nursing home care. Currently this is $7314 in Hawaii. The result is the number of months the giver is ineligible for Medicaid benefits. The ineligibility begins on the first day of the month in which the gift was given. The rest is arithmetic. In answering the 5 questions above, we are assuming that Mom has no other countable assets except the assets transferred to daughter and Mom is single.
ANSWERS:
1. Not yet. Mom has not applied.
2. In Hawaii not for 5 months (i.e. $40,000 divided by $7314 per month penalty equals 5.47 months and this is rounded down to 5 months. Penalty period starts in the month of the gift).
3. Immediately. The gift is not in the 3-year look back window.
4. In Hawaii, 54 months ($400,000/7314), because she applied during the 3-year look back period.
5. This is a gift of $62,500, resulting in a penalty of 17 months from the date of the gift. Mom will not be able to qualify for Medicaid until August of 2003.
* Ignorance of the law is no excuse.
Return to the Medicaid Planning Center
Legal Disclaimer
This information has been provided for informational purposes only. It does
not constitute legal advice. The receipt of this information does not establish
an attorney-client privilege. Proper legal advice can only be given upon consideration
of all the relevant facts and laws. Therefore you should not act upon any
of the information contained herein without seeking appropriate legal counsel.
Attorneys Judith Sterling and Michelle Tucker are both CPAs and licensed attorneys. They are the first two attorneys in Hawaii to be certified by the American Bar Association (ABA) accredited Estate Law Specialist Board, Inc., as Estate Planning Law Specialists, and are so certified by the Supreme Court of Hawaii. The Supreme Court of Hawaii grants Hawaii certification only to lawyers in good standing who have successfully completed a specialty program accredited by the ABA.
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Haseko Center Serving Maui and the Big Island by appointment 1-(800) 807-3820 |
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