We have all heard the phrase “it is better to give than to receive.” This is absolutely true, but if you think you might someday want or need to apply for Medicaid long-term care benefits, you need to be careful. You may be surprised to know that giving away money or property of any kind can interfere with your Medicaid eligibility.
Are you wondering if you will need to apply for Medicaid down the road? Are you concerned about how you will afford long term care? Having the right strategy in place is important. And because of how Medicaid rules are written, acting sooner rather than later is a must.
Under federal Medicaid law, if you transfer certain assets within five years before applying for Medicaid, you will be ineligible for a period of time. This is called a transfer penalty and even small transfers can affect eligibility. While federal law allows individuals to gift up to $15,000 a year (in 2021) without having to pay a gift tax, Medicaid law still treats that gift as a transfer.
Any transfer that you make, however innocent, will be scrutinized. For example, Medicaid does not have an exception for gifts to charities. If you give money to a charity, it may affect your Medicaid eligibility down the road. Similarly, gifts for holidays, weddings, birthdays, and graduations can all cause a transfer penalty. If you buy something for a friend or relative, this could also result in a transfer penalty. Gifting the car you no longer use to your newly driving grandson- yep, this could also result in a penalty.
However, certain transfers are exempt from this penalty and a conversation about an Asset Protection Roadmap may be the right next step for you.Before giving away assets or property, contact us to ensure that it won’t affect your Medicaid eligibility. Understanding the Medicaid process can be confusing and complicated, but we are here to help.