What is the Consequence of Transferring for Less Than Fair Market Value?
Gainesville elder and special needs attorney discusses the consequences of transferring for less than fair market value.
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“Starting January 1st, though, that’s going to be phased in and become longer and longer and longer and longer, until we get to the point where Medicaid is looking back five years to see if you have transferred anything of value for less than fair market value. If you’ve done that, people always wonder, ‘What is the consequence of doing that?’
If you’ve transferred an asset, what happens is Medicaid is going to impose a disqualification period. If you otherwise would have been qualified for Medicaid, but you gave away $68,000 in assets, what they will do is say, ‘You would have been qualified, however, we’re going to impose a penalty.’ They have a divisor rate. They’re going to divide that amount into whatever you gave away and come up with a number. It may be 7.5 months. They’ll say, ‘You would have been qualified, but for the next 7.5 months, you’re not going to get Medicaid. Figure out how to pay for it, have your family pay for it, but for that period of time, you’re not going to be qualified. After that, then you will be qualified for Medicaid.’
There are ways that, if you plan ahead, we can sometimes correct the transfer. We can get it paid back. We can do other things. If you talk to an attorney before you make the Medicaid application, sometimes we can either get the disqualification period shortened, or we can undo it entirely and make it so that one will not be imposed, if we plan appropriately ahead of time before you make the application.
It’s best, if you think Medicaid is an option, that you go ahead and start planning just as soon as possible and talk to someone who is skilled in getting all the options presented to you so you can figure out what’s best for your loved ones’ situation.”