I have some questions about Medicaid and gifting.

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First question on Medicaid is can the aging parent still own their home? Is it best to have a child on the home deed? Is there a value limit the home can be? On this so called gifting watch. Medicaid goes back 5 yrs looking at money gifts. Does this include checks for birthdays and Christmas? Which would be much less that a hardship gift like a down payment for a car or pay a childs house note if a parent wanted. Is there a value amount the can gift? And the big question is what if parents have a child freeloader who does not work, owns their own home and has been receiving monthly support for yrs and well over the $13,000 amount each parent could give. Child is healthy and not getting disability assistance of any kind. If the parents run out of money paying out of pocket for a nursing home and apply for Medicaid the money given to the child would need to be paid back to receive Medicaid assistance?

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I have another question. When my mother was first admitted to an Assisted Living apartment she did not have enough money so all of us kids (5 of us) chipped in money so that she could have enough for the entrance fee that they charged. Later in she went on Medicaid as I told you since she had a limited income. Since she was in the hospital several times since then and so the money that she had to pay for the Nursing Home was lower and now she has a balance in her account of more than $1500. Since we loaned her that money before and Medicaid saw the letters saying that we loaned her the money (because they wanted to know where it came from), is it ok now for her to pay us all back the money that we originally gave her to pay for her fees to enter the Assisted Living?
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Something that boggled my mind, for assets, was that while Mom's spouse was alive, they were jointly allowed to own $40K of assets. But after he died, Mom was only allowed to have $2K of assets to qualify for Medicaid help.

AFTER the spouse dies, the survivor can only have $2000 of assets?!? Assets were defined as ANYTHING--bank, property, car, investments, etc.

The baffling thing is, HOW did States come to that conclusion, that a surviving spouse is able to survive on only $2K worth of assets, yet the COUPLE was allowed $40K of assets?!?

Oh, and the IRS?
We were told by them, that a GIFT limit was $10K per year to a family member. Beyond that amount, raised red flags for tax purposes.
Not $13K.
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To JSWHITTLE, yes, the state Medicaid department will make an annual review to make sure the patient/recipient still qualifies for Medicaid assistance. That being said, it is also the legal responsibility of the recipient to actively notify the state Medicaid department of any financial changes in circumstances that could impact their receipt of Medicaid benefits.
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JS - my mom is in TX and on NH Medicaid and she has to be recertified every year. I get a detailed questionnaire as to her assets, income and changes and they want a copy of the the last 4 months bank statements from the date of the letter. And it;s like due within 15 days of letterhead date. As it happened within those months, year before last, she got several thousand $ from a hail storm insurance claim (she still has her home, which is an exempt asset and it sits empty) so I included the front & back of the canceleed checks to the roofing company so it was a zero sum gain.
Nevertheless 60 days later I had to fill out another form with more documentation on this "income" and within 7 days. I am pretty OCD on paperwork so I could do this but this is the sort of thing you need to be prepared to do.

Remember they are allowed to have 2K in assets or resources in their bank account, so if it's just $ 1,500 you should be fine. But if it's an extra $ 1,500 added to what was there and it takes her over 2K then spend it down.
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I also have a question about Medicaid. My mother is on Medicaid and they did a check on her income, etc. last year. Since she qualified for Medicaid at that time, do they check every year and do all that paperwork again regarding her income or is it just a one time. I am asking because while she was in the hospital (and not in her Nursing Home), her expenses were less so she has more than $1500 in her checking account. So that is why I am wondering if they come back to us and want to do all the paperwork again. (Does that make sense). In other words, once you qualify for Medicaid do they check finances again each year?
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Although it isn't a popular notion with kids that want to be taken care of, the best gift parents can give their children is to take care of themselves in their old age. Although this isn't much assistance for the above 'asker' it is important for folks reading this to keep in mind as we all plan for old age.
My husband's ex was a spoiled daughter and she became a free-fall spender as an adult. She spared no expense when it came to taking her kids shopping and buying them the best of everything. My husband made very good money while they were married and he did end up paying her spousal support after the divorce, some twenty plus years ago. She ended up with a good sized 401K and half of his pension, plus has a Masters degree (teacher) and was employed consistently until two years ago, when she evidently just decided she hated paperwork and quit doing it, was eventually fired from a tenured teachers job, let her house over the years totally disintegrate and fill up with dog poop and purchases and quit paying her bills. While she was shirking her responsibilities for grown up things, she 'helped' my stepdaughter with some college stuff, not thinking she might need the money to live some day. Last year she moved in with said daughter and darn near ruined her home life. She is a 62 year old child. Last we heard, she was going to buy a convertible with her 401K funds!
If the focus is on taking care of ourselves, acting responsible and not becoming the repeat 'gift giver' our own kids will hopefully do the same. People are living longer and longer and if you look at our country's financial situation and the health care crisis, we cannot afford to 'help' those who aren't willing to help themselves.
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The first question is: Does the (or an) aging parent need Medicaid long-term level of care now (in other words, will the elder qualify medically for Medicaid?).
If so, you certainly have some things to consider.
What has not been mentioned to you is how the Medicaid applicant is penalized for assets over $2,000 ($115,000 for a couple) transferred without fair market value compensation within five years of application and how this might affect a plan of action.
Medicaid invokes a "penalty period" for ineligible transfers. This penalty period is based on the total value of the transfers divided by the "Medicaid pay rate" in your State (the monthly dollar amount the State pays a nursing home for a Medicaid beneficiary). For instance, in Florida, the Medicaid pay rate is $5,000 per month. Assume transfers totaling $100,000. The penalty period imposed would then be 20 months of Medicaid ineligibility.
Sometimes the penalty period can be part of a strategic plan. You mention, for example, that a child has been receiving "well over $13,000 per year for years". If the elder(s) otherwise qualify, it may make sense to go ahead and apply and have the penalty imposed sooner rather than later. This would start the "Medicaid clock" ticking and the elder(s) would use private funds until the penalty period ran out.
You might then ask: "Where will the private funds come from if the elder(s) is not supposed to have more than $2,000 ($115,000 for a couple) in assets?
This is where planning with the remaining assets would come in...legitimately transferring assets and creating streams of income without inducing further penalty.
One other thought. If Medicaid may be in the elder(s) future the "gifts" to the adult child must cease and a different way to transfer funds to that child need to be sought.
Good luck and God bless!
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Don't forget that if a parent is supporting a child by letting them live with them, that expense should show up as household expenses. I would guess that the only gifts that count are checks written payable to that chid's name, or any large assets like a house or car. Even if they are making car payments for the child, if they own the car, that would not be a gift. It is still their car. Hope that helps. I know nothing concrete, just what I've learned through the process myself.
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To further illustrate the gifting point: If a parent has say 6 grown kids and each of them has 2 children, from an IRS standpoint no one will have to pay taxes on that money if she gifts within the IRS guidelines. However, if that limit is $13,000 and each person gets that amount (13K x 18 = $234,000) and two years later she needs to go into a nursing home, is pretty much out of money and has no other income source, she will be in a big bind. It would be perceived as divesting herself and giving the money to family rather than letting Uncle Sam have it. A that point they can also put a lien on her home and property.
One more point. In our family, my husband and his brother were put on the deed to their parents' home 20 some years ago. His dad died a few years ago and shortly thereafter, his mother went into a nursing home. The house was sold. Because neither the brother nor my husband were claiming that property was their primary residence, although the proceeds of the home was split three ways, both my husband/we and my BIL/he and his wife were hit with a very big tax liability because she had lived there for 45 years and of course, there were big capital gains on the house. It is better to inherit property than to share the deed most of the time. If the house is 'intended' to be moved back in to, they cannot take your home from you. Demonstrating behavior that appears to be 'skirting the system' will almost always end badly.
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You should consult an elder law attorney in your state. Basically, I believe the look back is, yes, 5 years. In that time, any effort to 'divest' one's net worth in order to qualify for Medicaid will be considered in qualifying.
The gift limit of $13,000 is only relative to IRS guidelines on the recipient and the person making the gift and paying taxes on that amount. It has NOTHING to do with Medicaid. This is where people get very confused. Regardless of the amount, if it is or can be perceived by Medicaid that giving this money away is to keep from having to pay for one's Medical care, then Medicaid can be denied. Need to be very careful about this.
The probably best thing to do is to put improvements into the house, because they cannot take your home from you. Again, talk to a lawyer. It seems most of the time, the 'kid' getting the extra cash seems to have the issues with being a responsible grown up. And parents seem to volunteer for this program.
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