What is the Medicaid Penalty Period?
by Tom Olofsson, Attorney at Law, www.MyTrustLawyer.com (773) 905-1193
When a person applies for Medicaid benefits their financial paperwork is carefully looked at.
The Medicaid Department looks for certain gifts or transfers. If transfers were made then Medicaid calculates whether a penalty will result. Medicaid will not pay the medical bills of the person during this penalty period.
The penalty period is figured by dividing the amount of the gift by the amount that it costs to stay in a nursing home for one month. In the Chicago area the cost to stay in a nursing home is around $6,000 per month. So, the amount of the gift is divided by $6,000. If the gift is $6,000 and we divide it by $6,000 we get a penalty of one month ($6,000 divided by $6,000 = 1).
In this case Medicaid will not pay the medical bills of the applicant for one month.
If the gift or transfer was $60,000 then we divide that amount by $6,000 and we get a penalty period of 10 months ($60,000 divided by $6,000 = 10). If the gift was $120,000 then the penalty period is 20 months ($120,000 divided by $6,000 = 20). So, if a person gives away $120,000 they will not be eligible for benefits till a period of almost 2 years passes.
The date upon which the penalty begins is as important as how long the penalty period lasts. This start date, in Illinois, will change soon. It is important that your attorney understand all gifts which have been made in order to do the best job planning and in preparing your Medicaid application.
by Tom Olofsson, Attorney at Law, www.MyTrustLawyer.com (773) 905-1193