This is something of a grey area. You must report most asset transfers to the Medicaid agency, and the transfer will usually cause a period of ineligibility for benefits. You could make an argument that the transfer of a non-countable asset does not need to be reported or, if reported, does not give rise to a penalty. This argument would not work in every state, but it could be that it is a common practice in your state. You will have to follow the advice of your local elder law attorney who will know how the rules are applied where you live.