Will my IRA have to be depleted before I can apply for assistance from Medicaid?

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I would like to give my children a monetary gift from my IRA. However, If I give them money and them find myself needing money from Medicaid, will that disqualify me from receiving Medicaid benefits.

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A transfer of your IRA money to your children will be viewed by the IRS as a taxable withdrawal followed by a gift. As mentioned by others, any gifts you make within 5 years of applying for Medicaid will normally result in a period of disqualification from receiving Medicaid coverage: the more you give, the longer the penalty period (exactly how long depends on the cost of a nursing home in your state).

It may be possible to convert the IRA into a fixed annuity WITHIN the IRA, which will not be a countable asset for Medicaid purposes. Whether that will benefit you in the long run depends on the amount of your IRA as well as your life expectancy.
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First, there are tax complications from gifting from an IRA; you should consult with an estate planning or elder law attorney to be aware of these.

Secondly, your IRA should fund YOUR care before becoming gifts to your children. It's not fair to dip into a taxpayer funded source when you have your own money but want to reserve it for your children. Medicaid is for genuinely, legitimately low income people, not those who have funds but want to reserve them for gifting.
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Consult an Elder Lawyer.
It might be possible to put the IRA in a Trust.
( I think it would have to be an Irrevocable Trust. But the drawback as I understand it is that you do not have easy access to the money and you would have to request disbursements from it.)
And then name the children as beneficiaries.

In reality though....
This is your money that you put away to use when you got older, to help maintain a particular lifestyle. If you need help and have to go into Assisted Living is this not what you put money away for?
Children should NOT grow up with the EXPECTATION of getting an inheritance when a parent dies. If it happens then good for them but it should not be expected. Why expect the government to foot the bill if you have $300,000 in an IRA? If you are in failing health now, sell the house buy into a retirement community that will go from independent living to memory care so you do not have to transition to another facility.
Or depending on your age now and your health buy a Long Term Care Policy that will help with the expenses you will incur. There are some that will convert to a Life Insurance if you pass before you need Long Term Care so the money that you paid in will be given to beneficiaries.
(getting down off my soap box about "hiding" or "gifting" money just to qualify for Medicaid)
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If any of your assets/resources are gifted in the five years preceding the application for Medicaid you will be charged a penalty that is equal to the amount of the gift. If you end up with a health issue that requires facility care, Medicaid would fine you. If the monthly charge for care is $5,000.00 a month, and you gifted $25,000.00 then Medicaid would not pay for your care for five months, 25000/5000. Payment would have to be made another way.

You may want to look at facilities that both accept Medicaid and those that are self pay. The selection of facilitues is much better if self pay. You may want to look into a long term care policy. This, is many times, the only way that there are ever any resources remaining at time of death for inheritance.

Any resource, your home, cannot be given away, must be sold for market value. See an elder law attorney that specializes in Medicaid Planning. Make sure all your documents are in place, POA, DNR, will, trust, etc....
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Medicaid is not an entitlement nor is it an earned benefit like Social Security retirement. It is for those who have less than 2000 dollars in countable assets and are on a low income. The whole purpose of an IRA account was for your needs to supplement SSI income. Gifting money from an IRA account will definitely affect Medicaid eligibility within the 5 year look back.
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ruralwannabe: Well, you were a bit crass in your post, but I will give you an answer anyway. An annuity is a contractual financial product.
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Dear Aging Nana,
I am familiar with applying for Medicaid in Illinois. Before you are approved for Medicaid, Medicaid will require you to "spend down your assets". They look back 5 years. You will be required to provide written copies of all bank statements, etc. You should contact a good attorney for assistance. You are permitted to make burial arrangements but I believe only a small amount is permitted for this. Medicaid will want an accounting for ALL of your assets including your house if you own one.
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It could be. States have different laws. I had a social worker for my mother's hospice tell me that here in Alabama it's 10 years, which is absolutely outrageous. If you have a skilled agency in the home, try asking to speak to a MSW (medical social worker) and they can answer those questions for you for free.
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The "expert" advice kicking off the answers is spot on. That is what we did.
It is called a "Medicaid compliant" annuity...Grace + peace,

bob.
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If on Medicaid you can have a car and a home. Medicaid sees the value in possibly income being generated from renting it out. They would place a lien on the house to recover expenses for care.
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