What consequence might occur if a policyholder transfers their disregarded assets?

Transferring disregarded assets can have significant implications for an individual's Medicaid application. When a policyholder moves assets that are considered "disregarded"—meaning they don't count against the asset limit for Medicaid eligibility—this action can be viewed as an attempt to hide wealth in order to qualify for benefits. Medicaid has specific rules that penalize applicants for such transfers that are done to gain eligibility improperly.

The penalty for transferring disregarded assets can result in a period of ineligibility for Medicaid benefits, which means the individual would not only be unable to receive assistance but would also face delays in accessing necessary healthcare services that Medicaid provides. This is particularly relevant for long-term care, where Medicaid plays a critical role in supporting individuals who require ongoing medical assistance.

In contrast, the other options regarding tax credits, additional health benefits, or unrestricted applications for Medicaid do not align with the regulations and understanding of asset transfers in the context of Medicaid eligibility.