Gifts That Can Disqualify you from Medicaid
Gifts That Can Disqualify you from Medicaid
Many times, you have heard that it is always better to give than to receive. It is a good practice unless you think that someday, you will apply for Medicaid. If you consider the Medicaid long-term care benefits, then you need to rethink about giving away your property or money, because any gifting will subject you to specific penalties. Gifting before applying for Medicaid reduces your eligibility and exposes you to the risks of penalty.
Worry of Disqualification from Medicaid
Sometimes, you may be worried about being disqualified from Medicaid because of giving gifts. Any assets that were transferred for qualifying for Medicaid can disqualify you from Medicaid. Nobody can predict what the future holds; hence, frequent medical check-ups are significant. If you often gift because of having a good heart, you might be able to challenge your eligibility in court. The best defense you can use is that you were not making the gifts with anticipation of moving to a nursing home. The defense could unhook you from being disqualified.
Eligibility for Transferring Assets
According to the federal Medicaid law, when you transfer some assets in five years before applying for Medicaid, you may be ineligible to apply for Medicaid. The ineligibility also known as a transfer penalty is issued for a period. Its application depends on the amount of money you transferred. The smallest transfers could also affect your eligibility. The federal law allows individuals to gift a total of $15,000 annually, with an exemption of taxes. Nevertheless, the Medicaid law will still consider that small gift as a transfer.
The transfers that you make, however small and innocent they may be, they will be classified under scrutiny. For instance, Medicaid lacks the exception of gifts to charities. When you give money charity money, it will profoundly affect your Medicaid eligibility in the future. Other awards that could cause a transfer penalty include:
- Gifts for holidays
- Gifting during weddings
- Birthday gifts
- Graduation gifts
- Gifting a friend or a relative
Documentation
As you plan on your Medicaid, remember to preserve the necessary documentation. Spending too much cash at once will make the state to demand documentation that shows how money was spent. Lack of that documentation that shows that you received a favorable market value will automatically subject you to a transfer penalty. Therefore, always check with your elder law attorney before gifting away your assets and properties. This practice will protect you during Medicaid eligibility.
Being prepared and knowing what gift will make you ineligible for Medicaid will save your money. If you wish to know more about how the law protects you about Medicaid, feel free to contact The Mattar Firm today and find out more.