With little exceptions, if you gift your assets to an individual, you will be deemed ineligible to obtain Medicaid benefits for long-term care for a certain time after applying for Medicaid. Gifts that were made before one is being admitted into a nursing home can be penalized and they are subject to a five-year look back penalty period. A gift that a person made within five years before applying for Medicaid will attract a penalty period where the amount that was gifted will determine the appropriate penalty.
Why Gifting affects Medicaid application
Medicaid is a government program to help low income or disabled adults to pay their long term care and health care costs since such people would are not able to foot the huge costs themselves. The income limit for singles is $884/month and the asset limit is $15,900. So if you have a lot of money beyond this value or earn a significant income, you may not qualify. The government won’t want to help you foot bills they know you can settle yourself. This means you have to spend your hard-earned money on the high long term care and nursing home costs when you get old.
And this is why people try to reduce their asset limit by spending down. Instead of using up their assets to buy things, some people prefer gifting them to their loved ones.
Gifts that are exempted from Medicaid Look Back
The following gifts will be ignored with regards to Medicaid eligibility:
- Gifts to a spouse
- Gifts to a child caregiver (Child caregiver exemption)
- Assets transferred to a special needs trust
How to use gift to save your assets
Gifting, however, is a great way to save your assets but it must be done at least 5 years prior to your Medicaid application. This is a way to bequeath your assets to your loved ones during your lifetime and then having Medicaid pay for your long-term care, as you get older.
Nonetheless, gifting would also attract taxes known as gift tax if not done right, and these taxes can cut deep into your estate. Proper planning would need to be done in order to avoid huge costs while leaving the most of your estate to your loved ones.
Medicaid Look Back Penalty period
The look back penalty period in Queens varies according to the value of assets gifted. It is calculated by dividing the value of the gifted assets by the Queens Monthly penalty divisor, which is $13,834 in 2021. So if you have gifted $27,700 during the 5-year look back period, your penalty period will be 2 months.
Note that this penalty period is calculated from the date you made the gift and not that at which you filed your application. So simply speaking, if you make gifts worth $27,000 in Queens, you would not be eligible for Medicaid for the next two months following the gifting. After the 2 months have elapsed, you may become eligible again.
Making a gift before applying for Medicaid can save your assets but can also jeopardize your Medicaid eligibility. To prevent that, you have to ensure that your timing is right. Don’t make a gift if you are certain that you’ll apply for Medicaid the following year or three years later. Call our office for more information.
Our Elder Law Attorneys in Queens can help
There are multiple rules that affect gifting strategies. It becomes important you seek the guidance of a professional Queens elder law attorney to protect your best interests and your assets.
You shouldn’t wait until you are ready to be put in a nursing facility before making plans. You have to plan long before that time (at least 5 years) in order to save your assets and protect your loved ones. Our elder law attorneys can assist you.
Our elder law attorneys are proficient in Medicaid planning and will help you strategize towards Medicaid eligibility and appropriate gifting.
Call us to get all your questions answered.