Important Facts About Medi-Cal: Exceptions to the Transfer Penalty

Transferring assets to certain recipients will not trigger a period of Medi-Cal ineligibility. These exempt recipients include:

• A spouse (or a transfer to anyone else as long as it is for the spouse’s benefit);
• A blind or disabled child;
• A trust for the benefit of a blind or disabled child;
• A trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the Medicaid applicant, under certain circumstances).

These transfer rules apply to the transfer of any and all property for the purpose of qualifing for Medi-Cal benefits. Unfortunately, Medi-Cal presumes that all transfers are for the purpose of qualifing for Medi-Cal. This rule creates a one month period of ineligibility for every $4,812.00 given away in a month.

Fortunately, Congress has also 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.  This cure can be a very important tool for crafting assistance in Medicaid planning