Important Facts About Medi-Cal: The Transfer Penalty

The second major rule of Medi-Cal eligibility is the penalty for transferring assets. 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 Medi-Cal on Wednesday. So it has imposed a penalty on people who transfer assets without receiving fair value in return.

This penalty is a period of time during which the person transferring the assets will be ineligible for Medi-Cal. The penalty period is determined by dividing the amount transferred by what Medi-Cal determines to be the average private pay cost of a nursing home in your state. The period of ineligibility starts on the first day of the month of the transfer. Example: If a Medi-Cal applicant made gifts totaling $90,000 in a state where the average nursing home bill is $5,000 a month, he or she would be ineligible for Medi-Cal for 18 months ($90,000 ÷ $5,000 = 18). Another way to look at the above example is that for every $5,000 transferred, an applicant would be ineligible for Medi-Cal nursing home benefits for one month. In theory, there is no limit on the number of months a person can be ineligible. Example: The period of ineligibility for the transfer of property worth $400,000 would be 80 months ($400,000 ÷ $5,000 = 80).