Under Mississippi and Federal law, transfers of assets by an Medicaid applicant within 60 months prior to a Medicaid application will result in a penalty of ineligibility. Congress does not want you to move into a nursing home on Monday, give all your money to your children (or whomever) on Tuesday, and qualify for Medicaid on Wednesday. So it has imposed a penalty on people who transfer assets without receiving fair value in return. These restrictions, already severe, have been made even harsher by enactment of the DRA.
This penalty is a period of time during which the person transferring the assets will be ineligible for Medicaid. The penalty period is determined by dividing the amount transferred by what Medicaid determines to be the average private pay cost of a nursing home in your state. In Mississippi, this divisor is $4,600.
Example: For example, in Mississippi, where the average monthly cost of care has been determined to be $4,600, and you give away property worth $46,000, you will be ineligible for benefits for 10 months ($46,000 ÷ $4,600= 10).
Another way to look at the above example is that for every $4,600 transferred, an applicant would be ineligible for Medicaid nursing home benefits for one month.
In theory, there is no limit on the number of months a person can be ineligible. However, for transfers made prior to enactment of the DRA on February 8, 2006, state Medicaid officials will look only at transfers made within the 36 months prior to the Medicaid application (or 60 months if the transfer was made to or from certain kinds of trusts). But for transfers made after passage of the DRA the so-called “lookback” period for all transfers is 60 months.