submitted by E. Garrett Gummer, III, Esquire – www.GummerElderLaw.com
We have all heard that it’s better to give than to receive, but if you have 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.
While federal law allows individuals to gift up to $15,000 a year (in 2019) without having to pay a gift tax, Medicaid law still treats that gift as a transfer.
Any transfer that you make will come under scrutiny.
For example, gifts to charities, for holidays, and birthdays, can all cause a transfer penalty.
Spending a substantial amount of cash could prompt the Commonwealth to request documentation showing how the money was spent.
If you do not have documentation, you could be subject to a transfer penalty.
While most transfers are penalized, certain transfers are exempt.
Even after entering a nursing home, you may transfer any asset to the following individuals without incurring a penalty period:
- your spouse;
- your child under age 21, or who is blind or permanently disabled;
- a trust for the sole benefit of anyone under age 65 who is permanently disabled.
In addition, you may transfer your home to the following individuals (as well as to those listed above):
- 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 has an equity interest in your home and who lived there for at least a year before you moved to a nursing home;
Before giving away assets, check with your elder law attorney to ensure that it will not affect your Medicaid eligibility.