Elder Law | While generosity goes a long way, it can sometimes hurt you in the long term if you might apply for Medicaid one day. It’s an important topic in elder law to understand what you can and can’t do, and how it could potentially hurt your chances for Medicaid eligibility.
While federal law allows you to gift up to $14,000 before having to pay a gift tax, Medicaid will still count that gift as a transfer of assets. This includes gifts to charities, graduations, weddings or other major gift-giving situations.
Under federal law, if you transfer assets within the five years, or 60 months, before applying for Medicaid, it can hurt your eligibility. This is also called a transfer penalty. It’s important to understand during the estate planning that any amount of transfer can be examined for legitimacy, and further potentially hurt your chances of qualifying. Even spending a large amount of cash at one time can cause the IRS to inquire about where that cash is being spend on.
However, there are some transfers for gifts that will be excluded from the Medicaid penalty. Those include a transfer of assets to your spouse, child who is blind or permanently disabled, or a trust for the sole benefit of anyone over the age of 65. There are certain exemptions for transferring your home to an individual as well, so check with a skilled elder law attorney for specifications. If you do receive an eligibility penalty, the length of time can be 10 months or longer.
If you’re in the process of estate planning and need assistance figuring out what qualifies as a gift and what could potentially penalize you, contact The Law Office of Michelangelo Mortellaro. As skilled experts in elder law, we are skilled in navigating the complicated Medicaid laws and rules.