Criminal penalty for assisting with Medicaid planning transfers.

The Balanced Budget Act of 1997, enacted Aug. 5, 1997, contains a provision that makes it a crime to assist an individual with the disposition or transfer of assets to become eligible for Medicaid benefits. Under prior law, the Medicaid recipient wa subject to a a criminal fine and/or imprisonment. The 1997 legislation essentially makes it a crime to counsel someone to transfer assets to make himself eligible for Medicaid.

Generally, a Medicaid applicant must declare assets that have been disposed of within the previous three years and assets that have been placed in trust within the previous five years. The applicant would be subject to a period of ineligibility for benefits if sufficient assets were disposed of during the lookback periods. Therefore, applicants who seek to become eligible for Medicaid assistance by disposing of assets are routinely advised to wait until the lookback period has expired before applying for benefits.

Since Jan. 1, 1997, in addition to the period of ineligibility, such applicants have been subject to criminal sanction--a fine of up to $25,000, imprisonment or both. As of Aug. 5, 1997, it is the professional adviser, not the individual, who may be subject to a misdemeanor charge and a possible $10,000 fine and/or one year in jail for advising an individual to dispose of assets to become eligible for Medicaid.

FROM ROBERT B. COPLAN, WASHINGTON, D.C.