Watch Your Language: Penalty Divisor

Iowa’s penalty divisor changes every July 1. What’s a penalty divisor? Let me explain.

If you’ve transferred assets within the lookback period, the state is going to assess an eligibility penalty period based on the value of all the transfers you made within that 60-month window. The penalty period can be calculated by dividing the value of that gift by the penalty divisor.

The penalty divisor is equal to the average cost of nursing home care in the state of Iowa. Iowa uses two amounts, a monthly average and a daily average. Beginning on July 1, 2016, for 2016-2017 the monthly amount is $5,809.13 and the daily average is $191.09.

Here are two simple examples. If you give away $81,327.82, you will have a penalty period of 14 months. If you give away $2,866.35, your penalty period will be 15 days.

Transfer planning is a big part of Medicaid and nursing home planning. Taking advantage of our expertise can help you avoid liquidating all your assets during a long penalty period. Call our office at (712) 737-3885 to schedule your Mutual Interview today.