Question: In October of last year, after privately paying for my husband’s nursing home care for three years, I applied for and was approved for Medicaid benefits on his behalf. At that time, my assets had been reduced to less than the maximum in my state for a community spouse. At my age (75), I decided that since I might need care in the future, it would be a good idea for me to keep a life estate in my home and transfer the remainder interest to my two children. Not wanting to cause a problem with my husband’s Medicaid benefits, I checked with the person who helped me at the county office and was told that if I made this gift, my husband would be disqualified. I live in a small town, and could not get the answer from a lawyer there. Is this correct?

Answer: No. Transfers by you as a community spouse after your husband has become eligible for Medicaid benefits will not affect his eligibility. Once his eligibility was determined, your resources are no longer considered “available” to him under what the “spousal impoverishment” provisions of the law.

That said, you can transfer the remainder interest in your home to your children, but be forewarned that because the remainder interest had value, this transfer could affect you in the future should you need to qualify for long-term care Medicaid benefits.

For example, if your residence is worth $100,000, at your age 75, the value of the remainder interest you are going to transfer is $47,851.00. If the average monthly nursing home private pay rate in your state is $3,000, then you would be disqualified for 15 months from the date of the transfer. Should you not apply for Medicaid benefits during the period of disqualification, then you will be home free.

Another word of advice: Since you will be gifting more than $10,000 to each of your children, you will be required to file a gift tax return on April 15th of the year following this transfer. While there will be no tax due from you, the filing of the return is required.

Question: My husband qualified for Medicaid two years ago, yet every so often, I receive requests for financial information from the Medicaid office. What is the purpose of these inquiries? I was told that after he qualified, my assets made no difference?

Answer: While it is correct that your assets are not deemed “available” to your husband, information about your income is relevant. In many instances, since the community spouse’s income is less than the amount set by the state as the minimum needs allowance, part of the nursing home spouse’s income will be allocated to the community spouse to bring the community spouse’s income up to the allowed level. If your income increases, then part of what may be allocated to you from your spouse’s income will be taken back and paid to the facility, thus reducing the amount paid by the Medicaid program.