When planning for Medicaid or Medical Assistance eligibility, it is important to consider the issue of gifting. Gifts made within 60 months or 5 years of applying for Medicaid may cause issues with eligibility. This is known as the Transfer of Assets Rule (or the “look back rule.”)
Gifts are anything that involve the transfer of assets for less than fair consideration. The look back period starts when one applies for Medicaid and is in a nursing facility or applying for PA Department of Aging Waiver benefits at home.
A transfer or gift to anyone other than a spouse may result in a period of ineligibility for Medicaid. The length of the period of ineligibility and is determined by dividing the average daily cost of nursing home care ($293.15/day in 2015) into the value of the assets transferred. It does not matter if the transfer is to a trust or outright, the look back period is still 60 months or 5 years.
Certain transfers are exempt and do not cause ineligibility for Medicaid. One example of an exempt transfer is a gift of the home to a caregiver child who has lived with the parent for at least 2 years and who has provided care and services to the parent that has enabled the parent to stay at home.
In order to avoid problems with the Transfer of Assets Rule, gifting and Medicaid eligibility, it is important to discuss transfers and gifts that have already taken place or that you may want to do in the future with an experienced elder law attorney.