This unfortunately opens you up to medicaid penalties, and may not be the safest move for transferring your assets. The best way you can plan is with a lawyer.

Dangers of giving away assets to qualify for medicaid

     The first problem you may encounter is the government. They closely examine your spending and gift history when you apply for medicaid. If you have given away or sold an item under market value, then you will temporarily be denied benefits. This is known as a “period of ineligibility” depending on the amount of uncompensated transfers in the past five years known as a lookback period.

     The government will find out about an improper transfer of a gift. When applying you have to submit financial documentation to prove your eligibility for benefits. For each month you could have been paid for nursing home costs with your own assets per month is how long your medicaid will be withheld. If you are to enter a nursing home at this time medicaid will not cover the costs. 

     In most cases creating an asset protection trust is the best way to protect yourself from ineligibility. Consider the impact of each strategy on:

• Spouses needs– Medicaid trusts are irrevocable, meaning you can no longer access what’s inside of it. This will; ensure the safe and legal transfer of assets to the person you choose.
• Legal penalties– It’s not only a bad idea to give away assets before applying to medicaid and fail to disclose the transfers. Even if the government doesn’t notice, it is likely that your spouse will have to pay it in the future.
• Inheritances-Giving large sums of money to relatives might not be a good idea. Medicaid will probably notice to transfer and there are no safeguards to prevent your child from blowing all the money. Even if your child is responsible, and puts it in a  savings account, they could lose it to creditors or in a divorce settlement. 
• Tax liability– The federal government assesses taxes on large gifts if you give away more than $15,000 a year or 11.7 million in your lifetime. You may be hit with a gift tax and Medicaid will treat these gifts as a transfer when you apply for Medicaid. 
• Home value– If you are to add your children on the deed to your house you may incur a Medicaid ineligibility period for up to five years. They will then have to pay capital gains tax on the difference in the selling price and the value of the house. If the home is sold before you pass away, then your family will have to pay Medicaid the value of the home in exchange for your care. On the other hand putting the home in an asset protection trust will preserve it for your spouse and heirs.
• Donations and life events– A trust allows you to set up distributions as gifts for weddings, birthdays, holidays and graduations without having to incur a transfer fee. Donations to charities will also not be counted as affecting your Medicaid eligibility.  

     The best way to protect yourself is to consult an elder law attorney. They will make sure that you have the best plan for Medicaid and for your family’s future.