Follow
Share

In MA you can give $13,000 each year to a child. What if a parent gives the gift and enters a nursing home. The parent pays nursing home costs for 2 years while, also, gifting 3 children $13,000 each year. Will the IRS "look back" and say that money needs to be used for nursing care?

This question has been closed for answers. Ask a New Question.
Find Care & Housing
Medicaid doesn't actually want the money back from gifts made during the 5 year "look back" period - they just postpone eligibility on a pro-rated scale:

"If an individual gives away money or property during the five-year look-back, it triggers a penalty period during which he or she is ineligible for government aid.
The penalty period equals the amount given away divided by the average cost of nursing-home care in your area. So, for example, if you give $60,000 to family members and a nursing home costs $6,000 a month where you live, you can't qualify for Medicaid for ten months."
Helpful Answer (5)
Report

"IV. GIFTING AND PENALTY PERIODS.

A. The gifting rules are very harsh. If you simply give away money or assets in an attempt to impoverish yourself and obtain Medicaid benefits, IT WILL NOT WORK! If you give away any assets within the look back period of FIVE YEARS prior to making a Medicaid application, Medicaid will impose a penalty period during which you WILL NOT BE ELIGIBLE FOR MEDICAID. The penalty period corresponds to the number of months for which could have paid for the nursing home if you had kept the assets instead of giving them away.

B. For example, if you gave away $50,000 within the look back period, Medicaid would divide the $50,000 gift by the average cost of one month in the nursing home (as determined by Medicaid) to determine how many months of ineligibility it would cause. The current number is $5247 (this number changes periodically), so a $50,000 gift would cause a 9.5 month penalty period ($50,000/$5247 = 9.5). Even worse, the penalty period only starts after you are out of money and would otherwise be eligible for Medicaid, and you apply for benefits. Then, for the NEXT 9.5 months you can't get medicaid AND you have no money to pay for the nursing home. This is a very big problem, and you must plan for it.

C. The nursing home can discharge you if you have no money and Medicaid refuses to cover your costs because of a penalty
Helpful Answer (5)
Report

Medicaid is a needs-based program. It is to help out persons who do not have assets/income to meet their own needs. A person who has assets is expected to spend them on their own care. When those assets are gone, Medicaid will be available to continue meeting the needs. Giving money away is not considered spending it on their own care. That is what the 5-year look back period is about.

A certified estate planner or an elder law attorney can provide guidance on preparing to qualify for Medicaid.
Helpful Answer (3)
Report

But if your parent is paying you room and board (my mom has dementia) and if (maybe she had to go into a nursing home...her money runs out and Medicaid has to be applied for) can't they "get" me for not reporting this on my taxes each year as income?
Helpful Answer (3)
Report

Ok hit enter before done with answer above. A parent in Texas cannot give a monetary gift, or assets gifts within the 5 year look back. It would be considered monies that could go towards a nursing home.
Helpful Answer (2)
Report

Please contact an elder law attorney. As others have already commented, you can get into a really sticky situation trying to spend your mom down so she can qualify for medicaid. There are some expenses that are legitimate; pre-paying funeral costs, for example, but don't try to wing it by taking advice from the internet. Keep in mind that the purpose of medicaid is to provided government funding for those who can't afford to pay for their own care. So, hiding money by gifting it is considered a fraudulent transfer.
Helpful Answer (2)
Report

Frustratedtoo - October, 2017 would be 5 years from now and she'd be 97. Alot can happen in that period of time especially with health care issues and costs. My mom is mid90's and in a NH now for a couple of years. My experience is that if they live long enough, even if they had a good nest egg, they will eventually run out of money. Personally I'd stop with the gifting now as in the situation you all are in is such that her expenses are pretty transparent and easily reviewed and the gifting will be obvious if she ever need to apply for Medicaid. What you don't want to have happen is that say in 2015 she needs to go onto Medicaid and in the review they find she gifted 30K to grandchild for college/wedding/whatever and you as the person financially responsible have to make up the 30K to the NH asap for her to stay there. And say in 2015 your personal financial & health situation has changed dramatically that you can't easily do this. Total panic situation and you really don't want to be in a bind like this if it is preventable.
Helpful Answer (2)
Report

Nigle take your rhetoric and go find the RIGHT BOARD for it. THIS IT NOT IT.
Helpful Answer (1)
Report

Mother, my sister and I are on the deed to the property mother is living on in WV. There is also a rental on this same property. The deed has been this way for almost 5 years. Her dementia is getting worse. If she has to enter a nursing home, will we have to sell the property for nursing home care?
Helpful Answer (1)
Report

To 1daughter--this is a different matter than the gifting issue. Please repost your question on the board as separate question--but the consensus is still going to be: don't take advice from the boards. Contact an attorney in the state in which you live. An elder law atty. can help you sort out things and also help you with estate plannning and structure a plan that is tailor made to your specific situation. As far as the Medicaid and "spending down" issue that has been answered here, I personally went with my brother to an EA to get answers pertaining to the state in which my mother lives. If you have a gift from a parent, whether it is for any reason at all, and your parent has used all their funds for assisted living, nursing home, etc. then the formula specified above by another person is correct, according to the state, and within the 5 yr. look back period. Her formula precludes medicaid to pay for some 9 mos. according to her formula. According to the lawyer we saw, the nursing home won't necessarily throw the person onto the street but will sue the family members to pay the bill. Medicaid is not who comes after you. It is the facility who provided the care. At least, in the state of PA. From other posts on this board that I've read, the family is not forced to sell the property in which they live and that was true in PA as well.
Helpful Answer (1)
Report

See All Answers
This question has been closed for answers. Ask a New Question.
Ask a Question
Subscribe to
Our Newsletter