Simple Vehicle Transactions That Create Big Medicaid Problems
Today we are going to take a look at another type of “hidden gift.” We previously looked at hidden gifts involved in transactions with a Texas nursing home Medicaid applicant’s homestead or house. Today we are going to look at transactions involving a Medicaid applicant’s car or vehicle.
For those of you visiting us for the first time, I use the term “hidden gift” to refer to transactions which may not appear like a gift that creates a Texas nursing home Medicaid penalty because of some technicality, when the reality is the HHSC looks past the technicalities and discovers these attempts at hiding a transfer of assets. And once discovered, a costly penalty can follow.
Example 1 – The Medicaid Applicant Buys a Car
When your parent applies for nursing home Medicaid in Houston or anywhere in Texas, the past five years of their financial transactions are subject to review. If during those last five years, your parent purchased a car or vehicle and put anybody else’s name on the title to the vehicle other than their spouse you may have a Medicaid gift penalty to deal with.
You may be surprised at that because after all, the Medicaid applicant is still an owner of the vehicle so how can it be a transfer that creates a Medicaid penalty? It is correct that the Medicaid applicant is still an owner, but they are not the only owner and that is the reasoning for the HHSC to impose a Medicaid penalty.
In order to determine the value of the transfer, the HHSC regulations provide that if a nursing home Medicaid applicant paid for a vehicle and titles ownership to the vehicle in his/her name and someone else’s name then the entire purchase price is a transfer of assets for Medicaid eligibility and will result in a penalty period based on the full purchase price. So if your parent paid $25,000 to buy a vehicle that has both of your names on it, the HHSC says your parent made a gift of $25,000. This gift will result in Medicaid ineligibility for more than 6 months (using today’s figures) that you will have to find another way to pay the nursing home bill.
Example 2 – The Medicaid Applicant Paid Part of Purchase Price
The outcome is a little bit different if your parent only contributed a portion of the purchase price of the vehicle. Let’s say you paid $5,000 towards the purchase price of the vehicle and your parent paid $10,000 towards the purchase price of the vehicle that is in both of your names. In that scenario, the HHSC says the amount of the transfer is $10,000. This would result in over 2 months of Medicaid ineligibility (based on today’s figures) where you would need another plan to pay the nursing home bill.
Today’s lesson is to remember the consequences of using a parent’s funds to purchase a vehicle that is titled in the name of anyone except your parent’s name alone. You may not realize it at first, but a seemingly harmless transaction at the time can cause significant problems when applying for nursing home Medicaid in the next 5 years.
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