Medicaid Gifting Rules
Asset transfer, also known as gifting, can allow a senior who requires nursing home care to take advantage of the Medicaid nursing home program without having to completely lose all their assets. Medicaid allows the applicant for the program to have only $2,000 in exempt assets, although the well spouse is allowed to keep up to $109,560 as well as the exempt property. Couples who find themselves over this limit may want to consider transferring some of those assets by gifting them to loved ones in return for a fair consideration for such a transfer. Once assets are effectively transferred, however, the potential applicant is ineligible for Medicaid for a specific period of time.
Increase in Medicaid Look Back Periods
The Florida Medicaid nursing home criteria for eligibility have become much stricter in recent years. For all gifts made after January 1, 2010, the look back period increases from the prior three years to five. Medicaid obviously wants to discourage people from giving away their assets to enable them to take advantage of the Medicaid nursing home program which is why they implemented both the look back period as well as the penalty period of ineligibility. During the look back period the state of Florida will look back at your financial records to determine whether your or your spouse made a gift of your assets.
Examples of Gifting and Penalties
The penalty period is a period where the senior is disqualified for Medicaid nursing home benefits is a transfer was made during the look back period. The penalty period length is determined by dividing the amount which was transferred or gifted, less the value received in return by the average monthly cost of care. The penalty period begins to run after you begin to receive care which would entitle you to Medicaid if you otherwise qualified aside from the gift.
As an example, if a senior gifted $100,000 to a son or daughter within the five year look back period, that gift would result in a penalty period of ten months which would not start until the senior was otherwise eligible for Medicaid nursing home benefits. A gift of roughly a million dollars made within the five year look back period would result in a penalty of a hundred months or 8.33 years, making the senior ineligible for Medicaid nursing home benefits until that time period had passed. However, should either of those gifts be made five years and one day prior to application for Medicaid nursing home benefits there is no penalty involved.
Are Certain Gifts Exempt?
There are transfers and gifts which are exempt from the Medicaid look back period and subsequent penalties. The transfer of a home to a child who lived at least two years with the applicant, providing necessary care which effective kept the applicant out of a nursing home is one such exemption. Others include transfers which are for the sole benefit of a spouse, transfers or gifts which benefit a disabled person under the age of 65, transfers to a disabled child, and transfers to a sibling who lived in the home for over a year and possessed an equity interest in the home. There are other exceptions as well, however you should absolutely consult an experienced Florida elder care attorney who can assess your individual situation and determine which exceptions apply. Florida Medicaid rules are constantly changing and are very complex, therefore if you want to take advantage of Medicaid gifting rules, do so with appropriate legal guidance.
Let us help you determine the best Medicaid Planning strategy that will work for your particular situation. We offer a FREE initial consultation that will answer many of the additional questions not covered here on our web site. Call us in Jacksonville at (904) 900-2750 or toll free anywhere in Florida at 1-866-306-3550, or you can fill in and submit the form below.