Gifts Can Affect Medicaid Eligibility
We’ve all heard that it’s better to give than to receive, but if you think you might someday want to apply for Medicaid long-term care benefits, you need to be careful because giving away money or property can interfere with your eligibility.Under federal Medicaid law, if you transfer certain assets within five years before applying for Medicaid, you will be ineligible for a period of time (called a transfer penalty), depending on how much money you transferred. Even small transfers can affect eligibility. While federal law allows individuals to gift up to $13,000 a year without having to pay a gift tax, Medicaid law still treats that gift as a transfer.
Any transfer that you make, however innocent, will come under scrutiny. For example, Medicaid does not have an exception for gifts to charities. If you give money to a charity, it could affect your Medicaid eligibility down the road. Similarly, gifts for holidays, weddings, birthdays, and graduations can all cause a transfer penalty. If you buy something for a friend or relative, this could also result in a transfer penalty.
Spending a lot of cash all at once or over time could prompt the state to request documentation showing how the money was spent. If you don't have documentation showing that you received fair market value in return for a transferred asset, you could be subject to a transfer penalty.
While most transfers are penalized, certain transfers are exempt from this penalty. Even after entering a nursing home, you may transfer any asset to the following individuals without having to wait out a period of Medicaid ineligibility:
- your spouse
- your child who is blind or permanently disabled
- a trust for the sole benefit of anyone under age 65 who is permanently disabled
- your child who is under age 21
- your child who has lived in your home for at least two years prior to your moving to a nursing home and who provided you with care that allowed you to stay at home during that time
- a sibling who already has an equity interest in the house and who lived there for at least a year before you moved to a nursing home
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The Law Offices of Jeremy W. Howe, LTD. are ElderLaw attorneys in Rhode Island who specialize in wills and trusts, estate planning, guardianship, probate, and Veterans Aid and Attendance Benefits.
They also are Newport Rhode Island Divorce Lawyers, Attorneys, Mediators, and Arbitrators providing services for family law issues such as divorce, child custody and visitation, support, and military family law.
Call them today at 401-841-5700 or visit them on the web at http://www.CounselFirst.com.
