﻿What "gifts" will be a problem with Medicaid? - AgingCare.com
Follow
Share

Mom sold her house and is living with us. Now that she has money she wants to spend it as she sees fit. She will pay for rent, some groceries and living expenses. I don't have an issue with that, it is her money after all. The problem is she wants to gift my daughter \$25,000 for a down payment on a home. Mom is 91 and is declining in health. My worry is that if she gets to the point where I can no longer care for her and need to apply for Medicaid for a nursing home, will my daughter have to pay back the \$25,000 before Medicaid kicks in? I don't want her to be stuck in the next few years having to pay back money that she likely won't have. Is there a limit as to the amount someone can give as a gift to someone without a Medicaid penalty? Has anyone had experience with this?

It will not be your daughter that will have to repay.

What happens is that Medicaid places a transfer penalty on your moms LTC Medicaid application. And for more fun in this, the date the penalty period starts is based on the date that mom files her Medicaid application AND NOT the day of the transfer of the 25k.

Transfer penalty is basically a math problem - a division equation but based on details unique to your states Medicaid program.

Here’s my understanding of it: Each state has fixed \$ amount it pays each day for room & board to LTC facilities for Medicaid beds. Some states, esp southern ones, pay a pretty low rate abt \$160 a day. While upper E coast ones pay double that rate abt \$275/\$300 a day. Amount set by your states legislature. Let’s say it’s \$185 R&B day rate.

if mom gifted \$ 25,000.00 that’s the dividend.
\$185.00 is the divisor. 25k by 185 = 135 DAYS (quotient), 4.5 months of private pay due BEFORE Medicaid eligibility kicks in.

Yeah it’s a penalty by DAYS of ineligiblity. Not \$ 2 \$ penalty.
Penalty period - again - starts day 1 from which LTC Medicaid application filed. Keep in mind, that to file LTC application, they have to be in the NH. They are already a resident there so they are building up a bill each day. Remember if they filed for Medicaid they are impoverished. They have no \$ other than 2k max in nonexempt assets.

If they were admitted “Medicaid Pending” then all they are paying while application gets evaluated is their monthly income (like SS \$) copay to the NH. But once a penalty has been determined, Medicaid sends out correspondence to the applicant, thier DPOA. And ALSO TO THE Facility. In quick time, the facility will expect all \$ due from day 1 at private rate to be paid to them ASAP or mom will get a 30 day Notice. They will Bill DPOA or whomever in the family that they can. It’s really important that you read in minute detail the admissions contract and pay attention as to how you sign each & every page to limit your exposure on this. Over & over on this site there’s posts from family who get billed for various reasons from the NH.... in the rush to get mom placed, in the drama with hospitalization, in dealing with family conflicts, etc., you are just oh so glad you got mom into a place, you just sign the paperwork and don’t get a copy of all pages. If mom moves out due to eviction, the bill still exists and will be turned over to collections. NH does not have to bill at lower Medicaid day rate either, although I think you could negotiate on this if your a real pittbullie personality.

So knowing all this, would moms gifting 25large be the thing to do???
Ignoring morality, it could be, if your ok on risk.
Risk that mom dies before ever needing Medicaid.
Risk that daughter will have income in 3, 4, 5 yrs to pay grannies 4.5 months of private pay rate NH & she will gladly pay the penalty.

I will say this, if mom insists on doing this, try to get her to do it as a up & up loan, so its done as a Promissory Note & drawn up by an atty.

Also if you think daughter won’t be able to uphold agreement to pay, I’d suggest that you get an attorney to do a caregiver contact between you & mom, and every cent Mom pays you as per caregiver contract goes into a new bank account that you will draw from to pay the penalty should mom have to apply to Medicaid before 5 years + 1 month lookback. Mom ought to do a caregiver contact or rent agreement with you whatever the case, but bank the \$ to have to deal with penalty. Unless \$ is of no object for you.
Report

Yes, that \$25K will be viewed as a gift. It would need to be put back before applying for the Medicaid or mom will be penalized for a certain period of time. There is no limit. The point being, you cannot give away your assets and then expect the state/federal money to pay for your care.

Some folks confuse IRS rules and Medicaid rules. IRS lets you give away some money each year up to a certain point regarding your taxes. Medicaid is not about your taxes. It's about a program for people who do not have enough money to pay for their care - that's why you can't just give your money away.

Ex: Mom is running out of money and you apply for Medicaid. They look over her application and the \$25K is the only thing they see that she gave away. There is a figure used to determine monthly NHome care in your state. Let's just say they tell you the \$25K creates a 5 month penalty period (because the figure being used for monthly NH care is \$5K per month). It means Medicaid will NOT pay for her care for 5 months - someone else has to pay it before Medicaid kicks in.

At 91 with declining health, it would not be wise to give away any of her assets or sell anything (like vacation property, etc) below market value.
Report

Why not just do the honest, moral thing and spend mom's money on mom's care? Rather than stiffing the taxpayers? Why would people think that stiffing the taxpayers is morally OK? One thing if there were no money, but since their is, do the right thing.
Report
Bridger46164 Oct 31, 2020
Rovana, Exactly right.
(0)
Report
Report
dgcctoth Oct 27, 2020
Thank you. I had no idea Florida didn't have the same laws as PA. Here's the thing, I am her POA and my name is on her bank account as well as hers but it is HER money. My name is on it just so I can manage it for her because she has been having difficulties balancing her accounts so I stepped in to help her. I will definitely be consulting a lawyer once I get to Florida.
(0)
Report
If she wants to help your daughter, have daughter work for it with a contract to be paid for what daughter can do for her. But, absolutely do it legally, see an elder law attorney.
Report

Medicaid looks back 5 years an 1 month. If she needs to go into a nursing home and sees large gifts usually over \$600. She will not be admitted for a certain number of months where she would have paid on her own. That means if she lives with you, she stays with you. Imagine if you have to quit work because she is incontinent, bedridden, and requires someone to constantly be with her for safety. Ask yourself, is she and you lucky enough that this will not happen or that she will have no major illness like a disabling stroke? Can she afford yearly costs of 90 k for AL, or up to 140k for a nursing home?
Report
my2cents Nov 4, 2020
The comment about filial laws will mislead this poster. Yes, some states do hold the family responsible for certain debts, You are correct MACINCT - if mom gives away her money during the 5 yr look back, mom is going to get a penalty. If it happens to be a 5 month penalty period, mom is going to need someplace to live for that 5 months or someone is going to have to come up with the NHome payment each month for 5 months. At 90+ years and failing health, things could be come quite serious as you mentioned. It may be a mightly long 5 mos of caregiving.

It's nice that mom wants to help the gr'daughter, but at this point in her life her money needs to be used to pay for the best care the money will afford her. If she goes ahead and gives the money to g'daughter, perhaps she can care for grandma in the new home for the penalty period.
(0)
Report

As to dealing with a five year look-back on gifts prior to qualifying for Medicaid, the \$25K gift will count against grandma. My neighbor’s ex-husband gave their daughter \$20,000 for college as part of a decades-ago legally-drawn joint custody agreement when they divorced. My neighbor agreed to no monthly alimony payments while she had primary custody of their daughter if her ex agreed to pay their daughter’s college expenses when she turned eighteen. He (the dad) ended up in skilled nursing care within less than five years after she used his funds for college. The daughter was told she had to pay back those funds in order for her dad to qualify for Medicaid. My neighbor appealed the decision on behalf of her daughter because the legal custody agreement went back much further than five years. Medicaid decided in this case that the daughter did not have to pay back her father’s funding of her college tuition. Essentially his gift was documented as having been made decades earlier in the financial custody agreement.
Report
That is a wealth of information. Thank you for it. Wish you were around a whole lot more!
(1)
Report
See 2 more replies
Talk to a lawyer to draw up a Medicaid Promissary Note. The note wont be discharged at death but you set the interest rate to little like a few cents a month and it does not affect Medicaid.
Report

Do not let her gift that money!!! My father never gave me anything but then decided he wanted to help out my kids with college. I should have known no good deed goes unpunished. Had he given them the full amount up front there wouldn't have been an issue but he had to dole it out a nickel at a time. After they are in school he decided he wants to go to AL and the money goes fast. Too late to expect the kids to change their educational choices...which they made based on the promised gift. At the time none of us even knew what Medicaid or a 5 year look back was. I was more concerned with the limit for the irs and gifting. Then I learned we could end up in deep doodoo because of this 'gift'. Can't tell you how many sleepless night I had worrying he would outlive his money and we'd have to find a way to pay back money no one had.
Report
BurntCaregiver Oct 27, 2020
Let her gift that money if she's gifting it outside the state of PA. If the mom is going to be living in Florida with her daughter (dgcctoth) then they won't have to answer to the state of PA and she will not be held responsible for her mother's bills should she have to go into a nursing home.
(0)
Report
Worried is exactly correct. PA does enforce filial responsibility laws.
Report
The only situations I have seen them enforced were unique situations.  Like parent had accident and insurance settlement, stiffed facility.   Not certain how common it is
(1)
Report
See 4 more replies
DON’T Let her gift the money. If your mother gives away \$25k and has to go to in to a nursing home within the next 5 years, she won’t pass the 5 year look bad so *someone* in the family will have to pay for the nursing home. Also, You are unfortunately in the one state in this country that enforces filial law so you very well could end up financial responsible for your mother if she can’t qualify for Medicaid.
Report
YIKE. Their Mom needs to hang on to the money for sure!!!!!
(2)
Report