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Medicaid transfer penalty
BLOG FOR FEBRUAEY 24, 2016
The Story Mary and John are married. Mary is engaged in Medicaid planning because she will soon be entering a nursing home and she wants Medicaid to pay the costs of the nursing home. She owns a home in her name only that she inherited. Mary wants to transfer the home to John and their three daughters as joint tenants with the right of survivorship for no consideration.
Question Will there be a transfer penalty?
Answer: There will not be a penalty for the 25% interest transferred to John. 1396p(c)(2)(B)(i); 405 IAC 2-3-1.1(k)(2) There will be a penalty for the 75% interest transferred to her three daughters because Mary did not receive adequate consideration, and the daughters do not qualify for an exemption. The penalty is computed as follows:
(Uncompensated value of transfer)/(average monthly cost of nursing home) = months of penalty