Medicare eligibility includes an assets test. Families will often transfer assets from one family member to another in order to qualify the original owner of the assets for Medicare. The assets can include real estate as well as liquid assets and investments. The states can "look back" to find such transfers for 36 months prior to the date the individual is institutionalized. If the assets were transferred for less than fair market value, the state can withhold payment for a penalty period determined by the amount of assets transferred.

Occasionally a family will ask for a professional judgment review to exclude these assets, on the grounds that the assets "aren't really theirs" and are being "held" for the relative.

Realistically, the purpose of a Medicare asset transfer is to preserve those assets to pay for expenses of the original owner that are not covered by Medicare and to preserve those assets as an inheritance.

When the assets were transferred to the parent, the parent gained control over them. The parent can spend them on whatever he or she wants. The parent has no fiduciary responsibility to the original holder of the assets. (If the parent used a power of attorney to authorize the transfer, then there is a fiduciary responsibility. There is always an implied moral responsibility to use the assets for the benefit of the original holder.)

Often the original asset owner doesn't even count as a member of the household, because they receive the Medicare benefits in their own name and so the parent doesn't provide more than half their support.

Families in such a situation want to have their cake and eat it too.

Some financial aid administrators will ask the family to document amounts that they pay on behalf of the original owner of the assets (i.e., basic living expenses and medical expenses not reimbursed by Medicare) and will adjust income to compensate. See also Eldercare.