What should we consider when Mom wants to give monetary gifts to family members for special occasions?
My mother is in a nursing home in upstate New York as a private pay resident and has sufficient funds for two years before going on Medicaid. She has two children, two granddaughters, and four great-grandchildren and would like to give them money for birthdays/Christmas. What is an amount that is appropriate for these occasions and will not be involved in claw-back, should she need to go on Medicaid in less than five years? Thank you.
When someone applies for Medicaid coverage of nursing home care, Medicaid looks back at the financial records of the applicant for the previous five years. It determines whether they applicant has given away, or otherwise disposed of, money or other assets during that time with the intent to "hide" or "protect" that money in order to qualify for Medicaid, which severely restricts the amount of assets a beneficiary may have. If Medicaid determines that money was disposed of in order to protect it and qualify for Medicaid, it can deny Medicaid eligibility for a period of time, the length of which depends on the amount protected.
The key here is the intent of the transfer of the assets. Medicaid may only penalize someone if their transfer of assets was with the purpose of qualifying for Medicaid. If gifts are made in the normal course of living -- such as birthday, graduation, or holiday gifts to children or grandchildren -- those gifts should not be counted by Medicaid as "hiding" assets as long as the amount of the gifts is reasonable. Unusually high gifts might raise a red flag for Medicaid. So, the key is that the amount of the gifts should be relatively the same (or less) as they were before this five-year look-back period. (Proof of the earlier amounts would help establish this.) If so, then Medicaid should consider them as normal expenses for your mother and not penalize her for them. Also, if the gifts have been large, she might consider reducing the amounts as she gets close to the time she runs out of funds and applies for Medicaid.