If you have questions about qualifying for Alabama Medicaid or you are concerned about the five (5) year “look back” rule or the penalty period, then the video above can help you or you can read below.
Here’s the basic gist.
When you apply for — and qualify for — Alabama Medicaid, then you must take a “box” or “folder” with all of your financial transactions for the last five years. Bank records, property transfers, etc.
Medicaid is looking for “gifts” — that’s where you received nothing back, or something less than the full fair market value back for whatever it is you gave or sold.
For example, if you sold your house worth $250,000 to your son for $100,000, then there would normally be a gift of $150,000.
If you gave away stock worth $50,000 to your daughter, then the gift is $50,000.
Medicaid then says “OK, you gave away assets during the last five years. Let’s add them up, divide them by $5500 [amount Medicaid says the typical nursing home costs per month] and the answer is the number of months going forward that you must pay your own nursing home bill.”
So for example if you gave away $55,000 worth of assets during the last five years, then the penalty is about 10 months that you must privately pay the nursing home bill.
The key is being smart about what to give away and when. And knowing WHEN to apply for Medicaid. Applying one month “too early” can cost a family hundreds of thousands of dollars.
Let us help you think through your options on what to transfer, when to transfer it, and when to apply for Alabama Medicaid.
If you live in Alabama or your loved one lives in Alabama, feel free to give us a call at 205-879-2447 or fill out our contact form at AlabamaElderLawyer.com and we will get back with you to help you understand your family’s options on using Medicaid to pay for long term care costs in a nursing home.
John G. Watts Watts & Herring, LLC Birmingham, Alabama