Transferring assets without penalty to get Medicaid to pay for long-term care involves selecting the right assets for transfer and transferring them to the right people, reports Nolo. Individuals can also transfer assets before the Medicaid period of ineligibility, states About.com.
Assets that Medicaid applicants can usually freely transfer without penalties include one car, household items, personal effects, and property that produces income or is used in a business, according to Nolo. Homes are transferable if they have low equity value and are transferred to the applicant's spouse, the applicant's child under age 21, a blind or disabled child, the applicant's sibling who has been residing in the home, or an older child who has been residing in the home and acting as caregiver to the applicant. Applicants can make transfers of assets to their spouse or disabled child if the assets are used for their sole benefit.
The Deficit Reduction Act of 2005 makes it difficult to transfer assets to others solely for the purpose of qualifying for Medicaid, reports Forbes. The law stipulates that any asset transfers made within five years of an application for Medicaid subjects the applicant to a transfer penalty period during which the applicant is not eligible for Medicaid. The number of months comprising the penalty period is calculated by dividing the value of the transferred assets by the average monthly cost of long-term treatment in the state. Only seniors transferring assets over five years before applying for Medicaid escape this penalty.