How Can I Help My Son and His Family Without their Losing Medicaid?
How can my wife and I gift a total of $40,000 to our son, daughter-in-law, and two grandsons without them losing their Illinois Medicaid coverage? We already have a trust set up for after our death, but want to gift money now when they really need it. Thanks.
There are four potential answers:
First, you could simply pay for items for your son and his family rather than giving them the money outright. In most instances, this will not be considered income to them and will not affect their Medicaid eligibility.
Second, depending on the state’s Medicaid program, you may be able to give the money to your son as a lump sum. Some states have a $3,000 asset limit for Medicaid and some do not. I don’t know about the one in Illinois in particular. If you can do this in Illinois, the gift will be considered income for Medicaid purposes but should only make then ineligible for benefits during the month of receipt. Your son would have to let the Medicaid agency know about the gift and might be required to reimburse the state for any medical expenses paid during that one month.
Third, in other situations, there may be a gap between your son and his wife’s income and the eligibility threshold. If, for instance, they’re earning $1,000 a month and the threshold for a family of four is $1,600 a month, you could easily give them $500 a month without affecting their eligibility for benefits.
Fourth, if your son, his wife, or any of your grandchildren is disabled (and became disabled before age 26), you can establish one or more ABLE accounts for them. This type of account is exempt for Medicaid and Supplemental Security Income purposes. You may contribute up to $15,000 a year to each account (that’s $15,000 total, not each of you contributing $15,000 as is the case with the gift tax exemption) and your son and his wife can manage the accounts. You can learn more about these accounts here.
To know the best answer for sure, you’ll need to consult with an Illinois special needs planning attorney. You can find one at www.specialneedsanswers.com.