Medicaid, as we know, is a public health care program for families or individuals that’s overseen on the federal level. There are mandatory compliance issues that play into the approval process as well and failure to comply with those issues can jeopardize one’s eligibility. There are asset levels that are determined by incorporating everything from the applicant’s home, any stocks he may own, bank accounts, and any other asset (with a few exceptions). In order to qualify, many discover they have too many assets that will prevent them from gaining an approval.
When that happens, many decide to “gift” their assets. That’s often when the problems begin. If it’s determined that those gifts were given improperly, there could be financial repercussions as well as the possibility of being ineligible to enroll in Medicaid for a period of time.
Of course, that brings us to one of the biggest questions our estate planning lawyers are asked: ”Is it even possible to give away, or “gift”, those assets in order to qualify for Medicaid?.
Defining a “Gift”
For the purposes of Medicaid qualification, any assets that you give away are considered gifts under federal guidelines. It could be your car, a second home, cash, boats or stock; it’s a gift. On the other hand, household goods, clothes, linen, books, etc. can usually be given away with no repercussions.
Along with that, the Deficit Reduction Act of 2005 directly addresses this issue. It was put into place to provide balance between qualifying for Medicaid and using assets as gifts. In short, it prevents efforts of hiding assets under the guise of “gift giving” while also tightening the other various Medicaid rules. Initially, it was specific to those who were entering nursing homes.
Part of the process is known as a “look back”. It requires a look into the past 60 months of an applicant’s life. Its purpose is to uncover the details of one’s assets. For instance, was there a house that the applicant no longer has that was given to another? Bank accounts are closely reviewed and other similar financial documents are scrutinized as well.
If there are any such transactions, and if it’s determined that a home or other asset was sold, given away or transferred at less than its value, it can be considered a gift with significant legal repercussions.
Estate planning lawyers understand just how detailed and complex these laws are. They also know that nursing homes can cost as much as $15,000 a month, which makes it virtually impossible for most of us to affordably bypass Medicaid or other insurance. It’s a hefty price tag that can and often does strain the budget of even the most wealthiest families.
Any estate planning lawyers who are worth their salt will ensure their clients are in compliance with these laws and not left vulnerable. Irrevocable trusts are often the financial tool of choice.
With so many options today, it is important to plan ahead. To do so, you should seek the services of an experienced estate planning and elder law attorney so you can move forward legally and with confidence.