Medicaid FAQs
The attorneys at Gerstein Grayson & Cohen, LLP provide professional and aggressive representation in the following areas:
Frequently Asked Questions
Question: Is it a crime to transfer assets for Medicaid-planning purposes?
Many people have heard that transferring assets, or helping someone to transfer assets, to achieve Medicaid eligibility is a crime. Is this true? The short answer is that for a brief period it was, and it's possible it will be in the future, although this is unlikely under current law. As part of the 1996 Kennedy-Kassebaum health care bill, Congress made it a crime to transfer assets for purposes of achieving Medicaid eligibility. Congress repealed the law as part of the 1997 Balanced Budget bill, but replaced it with a statute that made it a crime to advise or counsel someone for a fee regarding transferring assets for purposes of obtaining Medicaid. This meant that although transferring assets was again legal, explaining the law to clients could have been a criminal act. In 1998, Attorney General Janet Reno determined that the law was unconstitutional because it violated the First Amendment protection of free speech, and she told Congress that the Justice Department would not enforce the law. Around the same time, a U.S. District Court judge in New York said that the law could not be enforced for the same reason. Accordingly, the law remains on the books, but it will not be enforced. Since it is possible that these rulings may change, those considering filing a Medicaid application should first contact an elder law attorney. The attorney will be able to advise them about the current status of the law and avoid criminal liability for the attorney or anyone else involved in the case.
Question: Can a Medicaid transfer be avoided by the return of a transferred asset?
Yes. Congress has created a very important escape hatch from the transfer penalty: the penalty will be “cured” if the transferred asset is returned in its entirety, or it will be reduced if the transferred asset is partially returned.
Question: Is rental property counted as an asset in determining Medicaid eligibility?
In general, rental property is not a countable asset if it can be shown to be "business property essential for self-support." But this may depend on your state, so you need to check with a local elder law attorney.