Understanding the MaineCare Transfer Penalty

MaineCare, the Medicaid program in the state of Maine, imposes a transfer penalty as part of its eligibility rules for long-term care benefits (nursing home care, residential care/assisted living, and in-home care through the Home and Community Based Services waiver). In this article, we’ll take an in-depth look at what the transfer penalty is, how it works, and what it means for those seeking long-term care assistance.

What is the Transfer Penalty?

The transfer penalty is a period of ineligibility for MaineCare benefits that is triggered when an individual applies for MaineCare long-term care benefits but has made gifts with the “lookback period.” This penalty is specific to MaineCare long-term care – it does not apply to other MaineCare programs.

What is the Lookback Period?

The lookback period in Maine is five years. That means, at the time an individual applies for MaineCare long-term care benefits, DHHS examines all financial transactions to identify any uncompensated transfers of assets within the preceding five years.

What is Considered a Transfer of Assets?

Uncompensated transfers of assets include gifts to family members and others and selling assets below fair market value. Not all transfers trigger a penalty. Certain transfers are exempt, such as those made to a spouse, a child with a disability, or certain types of trusts.

How is the Transfer Penalty Calculated?

The transfer penalty is calculated by dividing the total value of all uncompensated transfers during the lookback period by the “divisor.” The current divisor in Maine is $10,739. The resulting figure represents the number of months the individual will be ineligible for MaineCare benefits.

For example, if an individual made transfers totaling $55,000 within five years of applying for MaineCare, the individual would be ineligible for MaineCare for five months. $55,000 ÷ $10,739 = 5.12 months.

What are the Planning Options?

An elder law attorney can help individuals structure their assets and finances in a way that complies with MaineCare rules and preserves eligibility. To avoid or minimize transfer penalties, individuals and their families should consider planning at least five years before long-term care is needed, but there are legitimate strategies to preserve at least some assets even after a health care crisis has occurred.