| GIFTS TO CHILDREN AND MEDICAID…READ ON:
READER QUESTION:
What is a safe amount of money I can take out of my savings and give to my children without affecting my Medicaid eligibility?
MY RESPONSE:
ZERO!
Okay, maybe that was a little harsh.
What about birthday gifts? What about giving each child $19,000 a year? What about helping a grandchild pay for college?
I feel your pain. You want to be generous with your family, but you certainly don’t want that generosity to come back and haunt you when it comes time to apply for Medicaid.
So, here are a few things you should know. First, any gifts made within five years of applying for nursing home Medicaid can result in a penalty. But here’s what many people don’t understand. It is NOT an automatic five-year period of ineligibility. Rather, the penalty is approximately one month of Medicaid ineligibility for about every $15,000 transferred.
Second, there is no transfer penalty when applying for home care Medicaid, also known as community Medicaid.
Third, when you apply for Medicaid, the Department of Social Services generally asks about gifts exceeding a certain amount, often $2,000 or $3,000. So smaller gifts may not even come up during the application process. But that doesn’t mean they can’t!
Fourth, and this is a big one, there is NO $19,000 annual gift exclusion for Medicaid purposes! That figure comes from federal gift tax rules, which have absolutely nothing to do with Medicaid eligibility. Don’t confuse the two.
So, what’s the bottom line? You don’t necessarily have to stop being generous with your children and grandchildren. But you do need to understand the potential consequences before giving away your money.
A little planning today can prevent a very expensive surprise tomorrow.
I hope this helps! |
