Do you enjoy giving gifts to your loved ones? Are you planning to give gifts of money to your loved ones this holiday season? Are you aware that monetary gifts can impact Medicaid eligibility? Unfortunately, if you need to apply for Medicaid in the next five years this could, in fact, have significant consequences. Be aware that the impact could be on both the giver and receiver.
For the gift giver, the IRS does allow a tax-free annual gift per person with an unlimited amount of donees. Be aware, though, that this relates to tax law planning, not to Medicaid eligibility.
It is very important to know that Medicaid takes a different stance on gifting. To be eligible for Medicaid, a person’s assets are reviewed. During this review there is a “Look-Back” period of sixty months, depending upon the state. If during the review 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.
Are there any options for the person deemed ineligible for Medicaid due to gift giving? Maybe. The gifter could collect the gift back, or reimbursement, in order to “undo” the penalty. Even if possession of the money makes he or she 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. There may also be a possibility of an undue hardship waiver, if Medicaid ineligibility will cause the person to go without medical care, food or shelter.
Additionally, for the gift receiver, there may be important impacts. All states have an asset limit to be Medicaid eligible and it is not very high. In fact, Florida allows a single person to only have two thousand dollars. Even a small gift can push a potential Medicaid recipient over the eligibility limit.
In Florida there are experienced Florida elder law attorneys who can give guidance, advice and some options to a potential Medicaid recipient if he or she receives a gift. 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. The firm of Britton G. Swank, P.A. is skilled at providing legal assistance to older adults and people of all ages preparing for the future. For more guidance on long-term care planning, please contact our office to schedule a time to meet.