Do you have family loved ones that you are considering giving gifts of money to this holiday season? Be careful, did you know that monetary gifts can impact Medicaid eligibility? If you did need to apply for Medicaid in the next five years, your monetary gifts could have significant consequences, both on the giver and the receiver.
According to the IRS, the gift giver is allowed a tax-free annual gift per person with an unlimited amount of donees. Remember, though, that the same IRS rules do not apply to Medicaid eligibility.
In fact, Medicaid takes an entirely different stance on gifting. For Medicaid eligibility there is a “Look-Back” period of sixty months, depending upon the state, when a person’s assets are reviewed. If it is found that the Medicaid applicant gifted money, or made an uncompensated transfer in order to be eligible for Medicaid, the penalty can be Medicaid ineligibility. The length of time of ineligibility is determined by the amount of the gift and the average cost of a private pay nursing home in the area.
Here are three options for the person deemed ineligible for Medicaid due to gift giving. (1) “Undo.” The gifter could collect the gift back, or reimbursement, in order to “undo” the penalty. (2) “Spend down.” Even if possession of the money makes the gifter ineligible for Medicaid, he or she can spend it down by temporarily paying for long-term care or making a home modification related to his or her disability until he or she reaches eligibility status. (3) “Undue hardship waiver.” There may be a possibility of an undue hardship waiver, if Medicaid ineligibility will cause the gifter to go without medical care, food or shelter.
In addition, there may be impacts on the gift receiver. All states have an asset limit to be Medicaid eligible and it is not very high. Even a small gift can push a potential Medicaid recipient over the eligibility limit.
Finally, does a potential Medicaid recipient have some options if he or she receives a gift? Perhaps. It is important to have the assistance of an experienced Ohio elder law attorney, who may suggest some remedies. For example, he or she may be able to pay off debt, purchase a funeral plan or a Medicaid eligible annuity. If money is received before applying for Medicaid, the money can also be spent down in a similar fashion.
Contact our office to discuss your options if you will be giving or receiving money or other assets this holiday season and anticipate this may impact your Medicaid eligibility.