What else about the divestment rules do I need to know?

Any non-exempt assets either you or your spouse gives away without receiving something of equal value in return may be classified by the state as a “divestment”.  Forgiving a debt or refusing money owned to you by someone else is also considered a divestment.  Such uncompensated divestments will render the applicant ineligible for Medicaid for a certain period of time, known as the “penalty period”.  A Medicaid penalty period is imposed because the government does not want you to deliberately impoverish yourself (by giving everything to your children or others) and then applying for Medicaid.  Your intent when making gifts is important.  For example, small regular gifts for birthdays, anniversaries, or graduations may not be classified as divestments.