Medicaid penalty and the 5 year look back. What will happen if my father gifts us?

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My father wants to gift money to my brother and myself. I have tried to explain the 5 year look back penalty to both. My father doesn't understand and my brother is only looking at the money he can get right now. My question/concern is what will happen if dad gifts us the money and then has to enter a nursing home. I have no problem keeping that money aside but I know my brother would spend it right away. If my father enters a nursing home and we are unable to replace the money can the nursing home, state, or government place a lien on my home or somehow sue me for the money? My brother is trying to talk my father into this which is ok with me but if he does need nursing home care then what happens if we don't pay back the money? I understand dad could become a ward of the state. I have assets (home/property) but my brother doesn't. He says "can't get blood out of stone" but I need to protect myself. I'm trying to get dad to speak with a lawyer. Any help here first would help me with the right questions to ask. Thanks

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Ok so you now definitely know that Dad has already gifted $ to brother.

Probability is that it will surface if & when dad applies for Medicaid. There will be a transfer penalty looming unless it’s not till a Spring 2023 medicaid application. Realize that the state can actually require dad to submit 5 full years of monthly bank statements. The checks to bro will be there. There have been folks on this site who have had transfer penalty over checks under $500. Really under $500.

I have a suggestion for you as I’m guessing dealing with dads future is going to fall to you as your the responsible sibling & that your brother if need be would not have the $ to pay any transfer penalty cause by the $ dad gifted to him. Here’s my thoughts, go through dads finances and do a tally of what the gifting is so far. Like from 2013 to now. Unless it small enough that you can totally pay from your own purse, I’d suggest that dad does a personal care contract with you and that the $ paid from the contract is set aside to have on hand to use for the transfer penalty when & if he applies for Medicaid. Contract needs to be done by an elder law atty and all done correctly for Medicaid compliance. Hopefully it’s not too too much $ & a year or two of the contract $ will totally offset any transfer penalty. 

The super sticky with transfer penalty is that the lookback starts the date of his Medicaid application AND in order to file for LTC Medicaid he has to already moved into a NH and impoverished (2k in assets) to apply. If there’s a penalty, dad has no $ to 
pay the penalty. His $$$ is gone, he’s poor. So once penalty placed, in order for him to stay at NH, family will have to private pay for him till he’s beyond the # of days (days not amount) of the penalty period. Or family moves him into their home. Whatever outstanding bill exists at the NH will be there and NH will turn it over to collections. He’s likely toast on getting into another facility unless family sign off to be personally responsible for paying. Really transfer penalty morphs into other issues. Having the $ from the personal care contract may save you from all this. Hopefully it’s not too much $ your dad gifted your brother.
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Reply to igloo572
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I talked him into not giving away his money (after he spoke with a lawyer friend).

I hope everything works out. I know my brother has taken some money.......hopefully not enough to raise any flags........thanks everyone
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Reply to kilkoyne
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Also, there can be a phase prior to Medicaid and NH - the AL phase, where the parent can't be home alone but is not medically needing NH. AL is more likely to be private pay, than NH is, so it's really important to have the funds.
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Reply to Linda22
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No you won’t be responsible for your dad’s debts if you don’t sign anything saying that you will be.

Yes it will affect dad if he needs a nursing home and doesn’t have enough money to pay for it or violates rules he isn’t aware of. 

Being a ward of the state isn’t a happy place to land. You and dad should research what that really looks like in your state.

Your father is Mortal. He will die. But he is alive now and might need his money to pay for his own needs, his own medical care. What could you or brother possibly spend his money on that is more important? The fact that dad wants to give away his money is suspect.

Your dad has responsibilities and he is in or entering his most vulnerable state since infancy.

There are documents your dad needs to have in place.
Does your dad have a POA for finance and medical decisions? Does he have a living will or health directive? Does he have a will? Does he need a care contract?
Has he paid for his cremation, burial or funeral? Has he had a good physical to see where he is medically and mentally?

If not, I agree you should take your dad to a certified elder attorney and get his affairs in order. Go with him on a doctors appointment. Find out the progression of any illness he has. Tell him all this must be done before any other decisions can be made to show he is physically and mentally capable of making large gifts. To help him decide to go, tell him that it is to protect you and brother and make sure you don’t make costly mistakes. 

Does he live alone? Is he still driving? How will he manage when he can no longer care for himself? To go into a nursing home properly known as a SNF (skilled nursing facility) there must be a medical need. Not just being old.

To enter a SNF on Medicaid there must be a medical and financial need.

Medicare does not pay for long term housing.
In other words there’s a space of time between living alone at home until entering a SNF that must be traversed. That can be a few years or decades if he is relatively healthy. This is usually at home with private or family care, in a child’s home or in an ALF. Very soon he can see that what might have seemed like a large nest egg can now look like not enough to see him to his life’s end. 

I suspect when dad has unmet needs you will be in it alone as the “turnip” will have lost interest when the money is gone.

That may not be a fair statement in your brothers case but if you read these posts you’ll see it’s fairly common. 

Medicaid is a program that is vital to the most vulnerable. If a person gives away what resources they have, then Medicaid isn’t available to them for a period of time depending on the size of the gift. There is a formula utilized and each state is slightly different.

Whether your dad will need medicaid isn’t something you can always predict. You may be thinking you will care for your dad when needed or that dad is very healthy. All that may be true but most elders are one catostrophic event away from real need. That he wouldn’t need his funds is a gamble he would be taking. 

He needs protection, not exploitation even if giving the money away was his idea. You may not be able to make your brother understand that. But you can do your best to protect your dad.

If dad is competent,  he can give all his money away. No law against it. But it could be a sign he’s entering a stage of dementia. In the next stage he may accuse you of stealing his money. It happens. 

But if he does give it away he (and you) may live to regret it when needs increase and a little private care would go a long way in allowing him to live at home and avoid facility care and give you a few hours of respite from caregiving.

Read the book “Being Mortal, Medicine and what matters in the end” by Atul Gawande. It won’t teach you about how to traverse Medicaid etc but it’s a great primer for “what matters” when we have our parents best interest at heart.

One other thought is your dad may be stressed with the constant pressure for funds from brother and he may be thinking he will be free of the problem when he is free of the money. He may be thinking it isn’t fair to you that he is giving money to brother and not to you? 

Whatever the reason he needs professional oversight and perhaps protection from his own generous inclinations because it does matter how this is handled. 

You are doing a good job to help him figure out the best course of action. 
Good luck and let us know how it goes.
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Reply to 97yroldmom
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Kilkoyne, your father can give his money away. He just can't give his money away and then expect Medicaid and the taxpayers to foot the bill for his care. Personal responsibility part of the elder care maze. Your brother could be paid using a personal care contract that Medicaid would allow, but it would have to include brother paying federal and state taxes on the services and have been put in place before money transfer took place....
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Reply to Guestshopadmin
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Thanks for the answers. My father is confused easily and keeps thinking he can give his money away. I think my brother has already taken money from him.

If dad goes to a nursing home it's going to be messed up. Right now I'm just trying to keep my side clean. I've been encouraging dad to see a financial elder attorney. I guess I'm really going to pressure him because I don't want to get stuck.
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Reply to kilkoyne
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Kilkoyne, you sound like the more level headed sibling. You are correct to worry about your elderly Dad gifting his money away at this point in time. You could be assessed a penalty period where you would have to self pay for your Dad's nursing home if Medicaid found money was gifted in the 5 year look back.

Aside from that, being elderly you do need a nest egg in case other expenses come up. Maybe your Dad will need home care at some point or maybe he will need to move to an assisted living ... which is usually private pay (even before he may need a nursing home).

Could Dad will the money to you and your brother? That way if he passes away without needing it it will be their for you guys.. otherwise he will have the money if and when it is needed.

Being elderly is expensive .. or so I have discovered through caring for both of my parents.
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Reply to katiekay
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Medicaid cannot put a lien on your property to pay for your father's care. Medicaid can and will refuse to pay for care that the money that was gifted within that 5 years could have been paid for privately by your father. When you apply for Medicaid, you give the state agencies an "all-access" pass to Dad's financials for 5 years. Medicaid will want to see five years of bank statements, award letters from Social Security or pensions, life insurance policies, prepaid burial setups, annuities, and lists of assets. Money Gifts or transfers of beneficiaries or property deed changes WILL show up. In the computer age, there is a trail for just about anything. Tax assessors have records for real estate. Banks track transfers and required reporting to the federal government for anything over $10,000. Pensions and IRA's track distributions. Many people think that the IRS limits on gifts per year without reporting also apply for Medicaid. NOT TRUE. The IRS limits and exemptions are for gift tax reporting. There is not an exemption for money transfers or property transfers other than a spouse for Medicaid when you apply.
Example: Dad gifts $15,000. Daily rate is $150 per day for Medicaid. Medicaid will not pay for the first 100 days of institutional care. If you have already put the parent into facility Medicaid pending, and Medicaid suddenly refuses to pay the money due from day one, the facility can and will issue a 30 day letter that states that they will start eviction proceedings and seek that arrangements for payment be made by the person or family members. It ain't pretty. If there is no money left or able to be repaid, the facility will seek emergency guardianship or have the state Adult Protective Services called in. APS will want to know where the money that should be there has gone, and they can pursue family members for taking advantage of an elderly person. Please convince Dad and brother that the advice of a Medicaid certified lawyer that is familiar with elder law and probate is the best way to go. It takes the "mean brother keeping money away" light off of you. If your brother is pushing for money now, there won't be money to repay. State guardianship means that any property not transferred will be administered by state, probably sold at fair market value, and the person may end up in a nursing home far from family. Asking for money from the government to help with finances comes with a lot of strings.
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Reply to Guestshopadmin
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Medicaid will not hold you responsible for accepting gifts. It will assess a penalty against your father, based on how much was given. The penalty is a delay in coverage of the nursing home costs. If the delay is, for example, 5 months, how will Dad be cared for during those 5 months? (Maybe Brother can move in with him?) Dad will not have funds to pay for his care -- he has already spent down to qualify for Medicaid.

Make sure your brother understands this. The penalty is against Dad. Is he OK with that?

I really think that Dad should see an attorney who specializes in Elder Law to find out the best way to be prepared for his own care, and any ways he can sensibly provide for his children. He should get POA documents and a will taken care of too, if he hasn't already done that. You and your brother should attend part of the consultation that does not involve confidential material.
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