Three Medicaid Qualification Strategies to beat the clawback provisions

  Bradley Elliott    October 25, 2016    1148

 

Introduction:

The USA is an advanced country in all respects. This is visible in the way it treats the unfortunate among the population. The state knows that medical facilities are very expensive in the country. Not everyone would be able to afford the same. People do have the option of Medicare and mediclaim. However, the poor people would not be able to afford the same as well. This has given birth to the concept of Medicaid. This is a social health care program for the underprivileged families and individuals with limited resources. This facility comes at no cost to the individuals. The state Governments take care of the funding of the scheme. However, of late, there have been instances of the recovery teams of Medicaid trying to take over the assets from the estates of deceased who have used this program. This is the “Clawback Provision” enacted by the Government in 1993 to take care of the rising costs of Medicaid. To avoid such issues, people resort to transferring their assets in the name of their close relatives. These form part of the Medicaid Qualification Strategies

What are the Medicaid clawbacks?

The US Government increased the Medicaid coverage. However, these raises came with a hidden agenda. The Government has a right to place a lien on the recipient’s assets once he or she reaches the age of 55. The Government can lay claim to the assets to recover the costs of Medicaid availed by these beneficiaries from the age of 55 to 64 years of age. Hence, the need has arisen for the people to transfer their assets and look for strategies to save themselves from this eventuality.  

We shall see the three Medicaid Qualification strategies adopted by people in this regard.

Strategy 1: Exempt transfers:

The law exempts certain kinds of transfers from incurring a penalty. In case it is a normal transfer at market value without any sort of concession, this would be a legitimate transfer and not a gift. This law also exempts transfers made with the specific purpose not to obtain Medicaid benefits. It also allows you to transfer assets to children under the age of 21 or to a trust for disabled people below the age of 65 years.

Strategy 2: Home Protection Trust:
 
The person has the option of transferring the property in the name of a trust instead of giving it directly to the child. The main benefit in such a transaction is that it protects the property from the law. The other benefit would be that as the child would not own the asset in his or her name, the creditors would not be able to seize the same. At the same time, the children can live in the house for the rest of their lives without having to pay rent or risk any of eviction.

Strategy 3: Life Estate Deeds:
 
This is a unique arrangement. It allows you to pass on the house to your children while you are still alive. The ownership passes on to the children after your demise without any sort of legal hassle. This would be a sort of a gift to the child as well.

Conclusion:

We have seen three Medicaid Qualification Strategies usually adopted by people to avoid the clawback provisions from taking effect.


 Article keywords:
Medicaid Qualification Strategies

 


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