Understanding Medicaid Home and Community Services: A Primer, 2010 Edition. Structure of the Penalty


Both SSI and Medicaid deny benefits for people making uncompensated asset transfers. The nature and effective duration of the penalty, however, differ between the two programs.36 The following discussion relates to the Medicaid provisions.


The terms “assets” and “resources” are used interchangeably to refer to savings, stocks and bonds, and other property. However, Medicaid law specifically related to asset transfers includes “income” in the definition of assets.

The general Medicaid rule is that states must determine whether an applicant, beneficiary, or someone acting on their behalf transferred assets (including the home) at any time during the 36 months prior to applying for Medicaid.37 For assets transferred after February 2006, the Deficit Reduction Act of 2005 (DRA-2005) extended the timeframe to 60 months. If a person did not receive fair market compensation, then states presume the transfer was made to qualify for Medicaid. States are required to have procedures in place that allow applicants to challenge that presumption.

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