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What Are The Medicaid Rules On Gift Transfers In Colorado?

If you wish to apply for Medicaid, but simply own too much to qualify, you might be tempted to simply transfer or gift your assets to others in order to get under the Medicaid income limits. However, lawmakers certainly don't want you to do this, which is why they created penalties for anyone who transfers certain assets within five years of applying for Medicaid.

If you do choose to transfer assets and money during this five-year "look back" period, the government may determine that you are ineligible for Medicaid for a specific length of time ― otherwise known a transfer penalty period. While calculating this transfer penalty period can be quite complex, it essentially boils down to this: You must divide your total transfer amount by the average monthly cost of nursing home care in your state, which, in 2017, is $7,854 in Colorado.

For instance, if you live in Colorado and you transferred $100,000 to a child during the five-year look back period, your transfer penalty period would be 12 months and 22 days ($100,000/$7,854, rounded up to the next whole day). This means you would not be eligible for Medicaid benefits for more than 12 months after you move into the nursing home, which may be difficult to pay for if the $100,000 you gave away was your total savings.

Are There Any Gifts/Transfers I Can Make?

While many gifts or asset transfers will trigger a transfer penalty period if done within five years of your Medicaid application, there are specific types of transfers that are exempt from this rule, including, but not limited to:

  • Transfers between spouses
  • Transfer of assets to a child who is blind or permanently disabled
  • Transfer of assets to a trust for the sole benefit of someone under age 65 who is permanently disabled
  • Transfer to purchase Medicaid-exempt, immediate annuities, but only if certain criteria are met
  • Transfer of your home to a child who is under 21, blind or disabled
  • Transfer of your home to a child who has lived in the same home for at least two years before you entered into a nursing home and who provided you with care that made it possible for you to stay in the home during that time
  • Transfer of your home to a sibling who has resided in the same home for at least one year before you entered the nursing home and who has an equity interest in the home

We Can Help You Navigate Colorado's Gift Transfer Laws And Rules ― And Avoid Costly Mistakes

Since the information above is simply a basic outline of how Medicaid's transfer laws apply in Colorado, it is always best to contact the attorneys at The Hughes Law Firm for more detail. In fact, while Medicaid planning is now more difficult ― not to mention dangerous when done incorrectly ― it is not impossible, especially when you have one of our knowledgeable lawyers by your side.

Contact The Hughes Law Firm today and let us help you create an effective strategy to obtain the care you need while still preserving a portion of your resources for your family. We understand that every situation is different, which is why we will carefully analyze and evaluate the Medicaid regulations that may be applicable to your case in order to determine which particular gifting strategy will work for you.

We offer free 20-minute phone consults, so contact us today and see how we can help. You can reach us online or call us at 303-268-3984. We have offices in Denver, Fort Collins and throughout Colorado.