There are pros and cons to gifting your assets to loved ones, especially if you need long term skilled nursing care in the future. The Vendor Medicaid rules on gifting are more favorable for married couples. However, single applicants may benefit from certain gifting strategies as well.
Proper nursing home planning may help save you or your loved ones tens of thousands of dollars or more. It is imperative that you consult an elder law attorney before making gifts or transferring assets that may disqualify you from receiving Vendor Medicaid benefits.
Cons of Gifting to Loved Ones
Medicaid does not want you to move into a nursing home on Monday, give all your money away on Tuesday, and qualify for Vendor Medicaid on Wednesday. So, it imposes a penalty on applicants who transfer money or assets without receiving fair value in return.
A person applying for Vendor Medicaid must disclose all their financial transactions during the five years preceding the date of their Medicaid application. This is frequently called the “look-back period.” The state Medicaid agency then reviews all transactions and determines whether the applicant transferred any assets for less than fair market value.
If there are asset transfers that are deemed “non-exempt”, the penalty is determined by dividing the amount transferred by the average private pay cost of a nursing home. This is called the penalty period. You may have to private pay for nursing home care during the penalty period.
The penalty period created by a “non-exempt” transfer within the look-back period does not begin until the person making the transfer has moved to a nursing home, they have spent down to the asset limit for Medicaid eligibility, have applied for Medicaid coverage, and have been approved for coverage except for the transfer.
Pros of Gifting to Loved Ones
Transferring assets to spouses and certain other recipients may not trigger a penalty period for Vendor Medicaid eligibility. It is important to consult an elder law attorney to determine what transfers may be exempt and to whom you can make transfers.
For certain single individuals, gifting and imposing a penalty period may be the best strategy for preserving the most assets. Ozarks Elder Law will evaluate your individual situation and present the options available for you and your family.
Call Ozarks Elder Law for a free consultation before making any gifts or transfers that may disqualify you from Vendor Medicaid benefits. We may also be able to help “cure” asset transfers previously made that could disqualify you from assistance.