Can an Assisted Living Resident Assist Her Grandchildren with College Costs without Running Afoul of Medicaid?
My mother is in assisted living. She has a total of approximately $255,000 cash in the bank, after selling her home and belongings. What are her options for gifting to grandchildren for college expenses, and still remaining eligible for Medicaid?
Any gift to grandchildren could cause your mother to be ineligible for Medicaid benefits for up to five years following the gift. In general, the philosophy is that if you can afford to help out your grandchildren, you shouldn’t be asking the state for assistance. There are, however, some exceptions, such as making transfers to trusts exclusively for the benefit of individuals who are disabled and under the age of 65. But any grandchildren who could benefit from this exception probably aren’t going to college.
Your mother can make some gifts and cross her fingers that she won’t need Medicaid for at least five years. If she were to lose that bet, the family could reimburse her what she paid out to help out with college costs. Under the Medicaid rules, transfers are “cured” and the penalty for making them is erased if the property transferred is returned.
All of this said, every state applies the rules differently; you will have to consult with a local elder law attorney to learn for certain if there are any strategies your mother can use. For instance, in some cases, it makes sense to transfer assets in order to qualify for Veterans Administration benefits that could help cover the cost of the assisted living facilities. This would be applicable if your mother or father was a veteran. In addition, some states have more lenient Medicaid transfer rules for assistance in assisted living facilities than they do for nursing home coverage.