How Scrutinizing is Medicaid Really? Part 2

Last week I wrote about a question I hear often about Medicaid.  Isn’t there a certain amount of gifting that is allowed under Medicaid regulations?  The answer as I stated last week is that there really isn’t.  Any gift or transfer for less than fair value is subject to a penalty.

In practice, however, the answer may vary.  Some states ignore nominal transfers, however the definition of what is nominal can be difficult to pin down.  In the 25 years I have been filing Medicaid applications for clients here in New Jersey, that dollar limit has changed, although it has always trended downward.  Back in the mid 1990’s Medicaid routinely ignored transfers less than $5000.  Gradually that number was reduced to $500 in many counties.  Now, however, in just about every county where I file applications, we are required to produce copies of every single check written by the applicant and spouse if applicable.

This makes every transfer no matter the amount, subject to discovery by Medicaid caseworkers.  In practice, there have been times when transfers have been overlooked.  A penalty is calculated on transfers for less than fair value but only if the State finds and calculates the penalty.

While I can never say with certainty whether a transfer was simply “missed” by the Medicaid caseworker or intentionally overlooked, I can tell you that there is no way to predict whether a transfer for less than fair value will be assessed a penalty.  So when someone asks whether there are small transfers that will be penalty free my answer is “we have no way of knowing the answer until the application is reviewed.  The safer bet is to assume there will be a penalty because the rules provide for one.”