In Medicaid planning, the challenge is knowing when a transfer will cause a problem.
The definition seems obvious, right? In daily life, a transfer happens when property changes hands. You can transfer money between bank accounts or germs between school children. In grilling and smoking, “transfer” means removing food from the grill or smoker.
For many lawyers “transfer” is another word for “gift.” Particularly in the estate planning context, it usually involves gifting property to a third party like a child or a charity.
Unfortunately, it’s not that simple in the Medicaid world. An expert elder law attorney will tell you that calling something a transfer raises all kinds of red flags and usually requires an explanation to the Department of Human Services. When dealing with Iowa Medicaid, all of the following are considered transfers:
- Trading in your car at the car dealer
- Paying the neighbor to mow your lawn
- Selling your one-year-old snow-blower to your grandson for $50
- Giving your kids $500 each for Christmas
- Donating a gift certificate to the local charity auction
- Tithing every week at church
- Selling your home to your child for less than market value
Some of these transactions are just fine while others create problems. They all have one thing in common: you have to explain them all to the Iowa Department of Human Services when you apply for nursing home Medicaid. If there is a transfer that causes problems, it must be subject to the penalty period.