The Medicaid rules take a very harsh position on gifts and look back five years to determine if gifts (called “improper transfers” by Medicaid) have occurred. In addition to many people not even knowing there are problems with gifting, even more people don’t know what might be considered a gift. When a gift is made, it will cause a penalty period to be imposed by Medicaid such that Medicaid will not pay for care during the penalty period if the gift was made within five years of needing Medicaid.
Depending on the part of the country you live in, the following may be considered gifts that cause a transfer penalty to be imposed by Medicaid: Christmas gifts to your children and grandchildren, wedding gifts, graduation gifts, paying tuition for a child or grandchild, giving to charities, giving to your church, etc. Adding a child’s name to real estate causes a gift. Selling an asset for less than it is worth causes a gift equal to the amount Medicaid says you undersold the property.
Another area where unsuspecting gifts can occur can be called the “incomplete gift.” For example, when a parent “gives” their children vehicles and even real estate, and even if the “gifts” were made more than five years prior to the parent needing Medicaid, it can still be an issue if the title is never transferred. This renders the gifts as not complete as far as Medicaid is concerned.
This is not to say that you should stop making such gifts, but be sure to find out the possible effects such gifts might have on you if you ever need Medicaid so that you don’t have any surprises down the road. Gifts are often fine if done as part of a well thought out plan created with the assistance of an elder law attorney. You must have a plan that covers the possibility that Medicaid will be needed within five years. Not having a plan is like jumping out of an airplane without a parachute.
Additional Information on North Carolina Medicaid Assistance for Nursing Home Care:
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