Are Small Gifts Exempt from Medicaid Transfer Penalties?

 In Long-Term Care Planning

Question:

Does Massachusetts allow individuals to give $500 a month to a daughter without being in violation of the Medicaid look back period? Is it better to give this with a check or cash?

Even small gifts have to be reported when applying for Medicaid,
Photo by Jp Valery on Unsplash

Response:

No, all gifts are subject to the Medicaid penalty for transferring assets. Could you, however, get away with it? Perhaps. When you apply for Medicaid coverage of nursing home care, you must report all gifts you have made during the prior five years. Failure to do so is a fraud on the state and a crime. That said, if you make occasional small gifts, the Medicaid intake worker may not notice them. And if you made gifts for purposes unrelated to achieving Medicaid eligibility, such as for birthdays, holidays and graduations, these should not be penalized. But a pattern of monthly gifts of the same amount are likely to be noticed and questioned.

While you would need to report these gifts, the penalty for making them is not that large. In Massachusetts, every gift of $367 makes you ineligible for benefits for one day. (Each state sets its own figure based on average nursing home costs in the state.) So, if you were to give your daughter $500 a month and then needed Medicaid coverage after a year, the penalty would only be 16 days of no coverage ($6,000 / $367 = 16.3). And if you gave this amount to your daughter for more than five years, the payments more than five years prior to your entry into a nursing home would not be counted. So, if your daughter needs the support and you want to help her out, and you’re not likely to move to a nursing home in the near future, I’d start giving her the money even if it would result in a short period of ineligibility should you need care in the future.

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