More Gifting & Medicaid-Related Misconceptions

Speaking of gifting, many people think that they cannot give anything away and receive Medicaid.  

 

Others are under the impression that inheritances are protected if the other spouse goes into a nursing home, or that "protected" assets pursuant to a prenuptial agreement will not be countable if the other goes into a nursing home.

However, these common assumptions are NOT true.

 

The Medicaid rules do provide some exceptions to the disqualification rules and therefore, some asset transfers are not penalized. For information relating to these exceptions, it is important to consult an attorney who is familiar with the laws of Medicaid.

Gifting Misconceptions

Many people are under the impression that individuals are allowed to make annual gifts of $14,000.00 (current annual gift tax exemption) to their children every year without any consequences.

However, this tidbit of "common knowledge" is false!

Although there are no consequences to making a $14,000.00 gift from a federal gift tax perspective, there is an entirely different set of rules from a Medicaid perspective which can create adverse consequences. Making gifts to your children every year could have a significant impact on the your and/or your spouse's eligibility for Medicaid. Under the Medicaid rules, there is a five (5) year disqualification period for all gifts made and there are no minimum gift amounts.    This being the case, if you are contemplating giving a gift to a child or to another third party, it is important to consult not only with your accountant, but also with an elder law attorney so that you have an understanding of the impact of that gift on Medicaid eligibility.