Medicaid Promissory Notes: Gift and DRA Compliant Transactions, Shielding Assets, Safe Harbors, Spousal Refusals

This CLE course will guide elder law counsel on the use of promissory notes to ensure Medicaid eligibility and effective long-term care planning. The panel will discuss tactics to avoid challenges in structuring gift and Deficit Reduction Act (DRA) compliant transactions, shielding assets, and converting to income while preserving Medicaid eligibility.

Elder law clients rarely plan for Medicaid asset protection. A sudden illness requiring immediate long-term care placement or a degenerative diagnosis that will require extended care can devastate a family. A critical method in protecting income and assets as permitted under the law is the use of promissory notes.

Before the enactment of the DRA, a Medicaid applicant could provide documentation to show that a transaction was a loan rather than a gift at the time of the Medicaid application, resulting in such amounts not being counted as an asset. The DRA imposed restrictions on the use of promissory notes, loans, and mortgages and such transactions must be DRA-compliant to avoid hindering Medicaid eligibility.

A Medicaid applicant's assets and income must meet certain state-mandated levels, and any transfer of assets can't be subject to the penalty period once an application is submitted. The applicant must prove that any transfers were for reasons other than qualifying for Medicaid to avoid a penalty for transferring assets without receiving fair value in return.

Listen as our distinguished panel experienced in Medicaid asset preservation reviews the eligibility requirements and discusses best practices in using promissory notes and other approaches to preserve the assets of senior clients facing a Medicaid eligibility crisis.