My elderly parents give me and my siblings money for Christmas every year. Will this hurt their eventual Medicaid eligibility?
Potentially yes. If a Medicaid applicant transfers certain assets, including large Christmas gifts, within five years before making a Medicaid application, a penalty could be assessed. The penalty is a set, period of time during which Medicaid benefits will not be rendered to the Medicaid applicant. During the penalty period, the Medicaid applicant will need to fine other means to pay the long-term care facility where he or she resides.
Wait a minute—doesn't federal law allow individuals to gift up to $15,000 a year (2021)?
Yes, this is an IRS rule regarding the federal estate and gift tax. Medicaid rules treat any gift made within the past five years of a Medicaid application, as a transfer of resources subject to a penalty.
All said, the five-year look-back rule has several exceptions, and sometimes it can even be used in a Medicaid applicant's favor. To discuss the look-back, gifting, and Medicaid eligibility requirements, please contact Darpel Elder Law today for a consultation.