Evaluating the Danger of Making Holiday Gifts When It Comes to Florida Medicaid Planning

Do you have a list of loved ones that you want to give gifts of money to this holiday season? Are you aware that monetary gifts can impact Medicaid eligibility? In fact, in the next five years if you needed to apply for Medicaid did you know there could be significant consequences? If you answered yes to the previous questions, be aware that the impact could be on both the giver and receiver.

From the point of view of the gift giver, the IRS does allow a tax-free annual gift per person with an unlimited amount of donees. However, that relates to tax law planning, it does not apply to Medicaid eligibility.

Medicaid takes a different stance on gifting. For Medicaid eligibility, when a person’s assets are reviewed, there is a “Look-Back” period of sixty months, depending upon the state. The penalty may be Medicaid ineligibility if it is found that the Medicaid applicant gifted money, or made an uncompensated transfer, in order to be eligible for Medicaid. The length of time of ineligibility is determined by the amount of the gift and the average cost of a private pay nursing home in the area.

Are there options for the person deemed ineligible for Medicaid due to gift giving? Possibly. The gifter could collect the gift back, or reimbursement, in order to “undo” the penalty. Even if possession of the money makes he or she ineligible for Medicaid, he or she can spend it down by temporarily paying for long-term care or making a home modification related to his or her disability until he or she reaches eligibility status. There may also be a possibility of an undue hardship waiver if Medicaid ineligibility will cause the person to go without medical care, food or shelter.

For the gift receiver, there may be important impacts. All states have an asset limit to be Medicaid eligible and it is not very high. In fact, Florida allows a single person to only have two thousand dollars. Even a small gift can push a potential Medicaid recipient over the eligibility limit.

Fortunately, with the assistance of an experienced Florida elder law attorney, a potential Medicaid recipient has some options if he or she receives a gift. For example, he or she may be able to pay off debt, purchase a funeral plan or a Medicaid eligible annuity. If money is received before applying for Medicaid, the money can also be spent down in a similar fashion.

Contact our office to discuss your options if you will be giving or receiving money or other assets this holiday season and anticipate this may impact your Medicaid eligibility.