By Kim Boyer
Elder Law News
July 2006
When applying for Medicaid, the state will "look back" five (5) years to see if any gifts have been made. The state will not let you just give away your property or your money to qualify for Medicaid. Any gifts or transfers for less than fair market value that are made during the "look back" period may cause a delay in Medicaid eligibility.
At the time of application, the Medicaid agency combines all the gifts that fall within the "look back" and divides the amount by $4,583 per month. The result is the number of months the applicant is ineligible for Medicaid benefits.
On February 8, 2006, the Deficit Reduction Act ("DRA") was enacted, changing Medicaid rules. For gifts made before February 8, 2006, the ineligibility period begins when the gift was made. For gifts made on or after February 8, 2006, the ineligibility period begins when the applicant is in a nursing home and is otherwise eligible for Medicaid except for having made the gift.
Here are some case scenarios. The question is: "When will the following individuals become eligible for Medicaid benefits?"
CASE 1: Maxine gave $100,826 to her son 12 months ago. Answer: Maxine will not be eligible for 22 months from the date of the gift (i.e. $100,826 divided by $4,583 per month equals 22 months.) The gift was made before the DRA so the disqualification period begins when she made the gift.
CASE 2: Betty gave $100,826 to her son 2 months ago. Answer: Like case #2, the disqualification period is 22 months. Unlike case #2, the gift was made after the DRA so the disqualification period begins when Betty enters a nursing home, applies for Medicaid, and is otherwise eligible for Medicaid, except for having made that gift.
CASE 3: Vera gives all of her money ($45,830) to her daughter today. Vera enters the nursing home tomorrow and applies for Medicaid benefits. Answer: Vera will not be eligible for 10 months (i.e. $48,830 divided by $4,583 per month equals 10 months).
CASE 4: In June 2001, Gordon gave his son $120,000. Gordon enters a nursing home tomorrow and applies for Medicaid benefits. Answer: Gordon is eligible for Medicaid immediately. Gordon's gift is not in the 5-year look-back period, as it expired in May 2006.
CASE 5: In July 2003, Harold puts his daughter's name on his house worth $146,656. Harold enters a nursing home tomorrow and applies for Medicaid benefits. Answer: Adding his daughter's name to the deed is considered a gift of one-half the value, or a gift of $73,328. This results in a penalty of 16 months from the date of the gift. This gift occurred during the look-back period; however, the disqualification period has expired and Harold is eligible for Medicaid.
Obviously, the gifting rules can be complicated at times, and there are various exceptions to the gifting and transfer rules. The penalty divisor also changes periodically. As always, it is important to consult a knowledgeable elder law attorney for advice.
Disclaimer: This information is for general informational purposes only and does not constitute legal advice. For specific questions, you should consult a qualified attorney.
