When a person applies to receive Medicaid, they will be subject to a review of their need which includes a look back over the previous five years for transfers of property for less then it’s fair market value. If an improper transfer did occur, then a penalty period, which could last for years, may be assessed which denies the applicant coverage. However, there is a little used hardship exception which may be sought even if the hardship is brought about solely because of the penalty period. To claim it, the applicant must show that access to Medicaid is necessary to maintain their health or that a lack of access would take away their ability to have the necessities of life such as food or shelter. The big catch is that the applicant has the burden of proof and each state is free to set a hardship standard which means some might be out of luck based solely on where they live. As a result, before pursuing any exception to the penalty period, be sure to check the statutory and case history in the state of residence of the applicant due to variability that might exist in defining hardship.
See, The Hardship Exception to the Medicaid Penalty Period: Rare But Possible, Elder Law Answers, December 22, 2015.
