Are You Penalized By the Nursing Home For Making A Contribution to Your Grandson’s College Tuition?

In 2009, your father was 80 years old and in reasonably good health. He gave $20,400 to his grandson to pay for college in 2009. However, last month he has a stroke. As a result of the stroke, he is totally incapacitated and in need of nursing home care.  However, he is not yet in a nursing home, but his total assets are $2,000. During this month, you inquire about his placement at a nursing home. The nursing home questions you about your father’s finances and any past transfers, and you report the $20,400 gift made for his grandson’s education. The nursing home states that your father will qualify for Medicaid BUT FOR a penalty period of THREE MONTHS due to the $20,400 gift. You don’t have the funds and neither does your father. The nursing home refuses to take your father. Likewise, you go to another nursing home, and they refuse to admit your father.

The issue, did your father intentionally intend to defraud Medicaid, by giving money away to his grandson. I would say NO; however the State of Maryland sees it differently.

Additionally, the three month penalty period does not commence, until your father is institutionalized in the nursing home. Under the Medicaid rules, institutionalization in the nursing home is necessary in order to commence the penalty period.

Therefore, we have a penalty period that will not commence until you’re in the nursing home, but the nursing home won’t accept you until the penalty period expires or you have private funds to pay for the three month penalty. Crazy?????