Is it illegal to transfer assets under Alabama Medicaid or VA Pension?

“Is it wrong to give them away?”

No. It’s not wrong to give away or to transfer assets assuming the person giving them away has the mental capacity, or if they don’t have capacity, somebody has a proper power attorney and they’re fulfilling that power of attorney in the correct way.

“I thought Medicaid said it was illegal to give away assets for five years?”

If you give away assets and then you apply for Medicaid when you’re qualified, then we look at the 5 year look back rule.

Medicaid is going to look back 5 years and ask, “did you give anything away?” If you did or if your parent or your brother, whoever we’re talking about, you have to say, “yes.” It’s illegal to lie about it.

If the answer is “no, I did not give away anything in the last 60 months” then that’s not illegal as it is true.

“What about penalties under Alabama Medicaid?”

Medicaid will penalize you as follows:

Take the total amount of gifts in the last five years, divide it by $5,800, and the answer is the number of months you have to privately pay for the nursing home before Alabama Medicaid starts paying.

Here’s an example:

In the last 60 months you gave away $116,000.  So we divide that by $5,800 and the answer is 20.

Twenty (20) months you have to privately pay.

“Is there a look back period under VA Pension (Aid & Attendance)?”

Right now the VA does not have a look back period but they’re trying to establish one. To be honest, I think they’re doing it outside of their power and authority but the word on the street is that in April of this year (2017), they’ll start this and they’re going to do a 3-year look back period and then there will be a penalty going forward.

There is a lot of confusion right now.  The proposed VA rule change has lots of problems and we’ll see how it gets sorted out by the VA or in the courts.

But understand the VA is wanting a 3 year look back period and then if there are gifts made in that 3 year look back, there will be some penalties of not getting the VA Pension payments even though you qualify.

Feel free to contact us, 205-879-2447, or click here to fill out a contact form and we would be happy to get in touch with you to help you anywhere in Alabama.

Have a great day!

John Watts

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