Gifting to Children / Medicaid (Title 19)?

[GoodSense]

Got a question about Medicaid (Title 19) and wondering if others have any insight.

My in-laws are in their mid-60s and plan to retire in the next two years. They have saved up a decent nest egg, and their fixed income (pensions, SS) will more than cover their on-going expenses. They would like to gift $10K to each of their children every year. However, they are worried that if they end up in a nursing home in say, 20 years, and their assets are depleted, they would not be eligible for Medicaid/Title 19 because they have gifted money away to children. In other words, they don’t want to give us money over the years, just to have the court ask for it back in 20 years. They don’t want to do anything illegal. They just want to help the kids out.

I am not familiar with Medicaid at all. They also have LTC insurance, but there seem to be a lot of question as to what that would cover. Can anyone provide more information or point me to a website?

Thanks!

 

[MasterBlaster]

Your question should be...

What is the clawback period for Medicaid financial aid ?

I am not absolutely certain, but I beleive it is set by the states per their own rules.

perhaps someone else can chime in here.

This website shows that the clawback period is 36 months. In some cases though the clawback period can be up to 60 months.

http://www.cms.gov/MedicaidEligibility/10_TransferofAssets.asp#TopOfPage

You need to speak with a professional about this, but there are ways for trusts and annuities to shelter income such that it doesn't get counted towards the Medicaid wealth test.

The downside to all of this is that you are condemming people with assets to a Medicaid facility. If you haven't seen one of these for yourself then you should. They are really really pitiful places.

Perhaps that money could be saved and used for a more dignified last stop.

 

[Rustic23]

This is a pretty good article:
http://www.aabri.com/manuscripts/09318.pdf

Seems like congress mandates 5 years, I don't know if individual states can require a longer period. You might try to google 'medicaid gift to children' There are several articles.

 

[GoodSense]

Thanks for the links! Very helpful indeed.

MB, from what I read, it doesn't really matter if you are on your own assets or Medicaid when it comes to the facility of the nursing home. DH's grandma was in a nursing home for 9 years (possibly a world record) before it exhausted her assets. Then the remainder 2 years she was on Medicaid in the same facility with the same treatment.

In my in-laws' case, they expect to be paying for their own nursing home for at least a few years. It's just hard to say how long they will need it for given what happened to DH's grandma.

 

[donheff]

If you stay under the $13k/per yr/per person gifted limit how would they even know? You don't have to report those gifts, only larger gifts.

 

[Rustic23]

How about if they decide to look at your financial s and ask 'what are the $13K checks for to your grand daughter?'.

 

[GoodSense]

I guess once you apply for Medicaid, they'll look through everything. The article I read (thanks to Rustic) said that any gift over $1,000 is looked at. They said even charitable gifts to churches, etc. from the last 5 years may disqualify the applicant from Medicaid for a period of time.

 

[oilspill]

As an alternative to nursing home, perhaps you could let someone live free in your house in exchange for taking care of you. When that gets to be too much for the caretaker, find someone else who needs the "job" more. Be creative and be flexible.

 

[Martha]

As an alternative to nursing home, perhaps you could let someone live free in your house in exchange for taking care of you. When that gets to be too much for the caretaker, find someone else who needs the "job" more. Be creative and be flexible.

My experience with people who have done similar things is that they have to pay a not insignificant amount of money to the caregiver as well as providing room and board. Taking care of someone is a 24/7 (hey, that is the first time I've used that expression. Yuck!) job, so they also will want time off. You don't want to go too cheap and end up getting ripped off or poorly cared for.

As far as medicaid, there are undue hardship exceptions so you can get into a nursing home, but medicaid will have lien rights and may ( very well have the right to get money from those who you made transfers to without equivalent value in return. State laws vary on who they can chase and for what.

Note that the look problem is not the only problem, there also is a penalty period for those going into institutional care. The penalty period, IIRC, is calculated by taking the monthly amount private nursing home care costs in your community and dividing it by the amount of the transfers during the look back period. The result is the penalty period. You can have odd and arguably unfair results if you aren't careful. If you transfer 100,000 to your kid five years and one day before going into the nursing home, the transfer would not get caught in the look back so their is no penalty or ineligibility period. But if you went into the nursing home one day earlier the transfer would be caught in the lookback and the resulting penalty could run quit a long time. Say the private care cost $5000 a month, the penalty for the $100,000 transfer would be 40 months.

See my signature.

 

[LARS]

MB, from what I read, it doesn't really matter if you are on your own assets or Medicaid when it comes to the facility of the nursing home. DH's grandma was in a nursing home for 9 years (possibly a world record) before it exhausted her assets. Then the remainder 2 years she was on Medicaid in the same facility with the same treatment.

I believe the rub is that you can't start in a "nice" facility with assets that are not sufficient to cover a good number of years because ONCE YOU ARE IN if your assets run out (like your grandmother after many years) THEN they can't kick you out. The nursing home must accept medicaid at that point.

Facilities that are medicaid from the get go ARE NOT generally very nice.

This, of course, leaves aside the whole moral issue of sticking others with the bill for your care when you could have afforded it.

 

[Stevewc]

The OP mentions they have long term care insurance too.
If they have good coverage that should put them in good shape.
Steve

 

[chinaco]

You can contact Medicaid in the state. They will tell you the rules. They are your best source. Some states have an advocacy group you can contact to discuss how assets figure into the qualification for medicaid.


It is a good topic to research and prepare... just in case it occurs. However, it is a complicated topic. The claw back rules can be a little complicated... There are also rules about what the spouse can keep from the joint assets and income. Before they giveaway their money, they might want to make sure they have a good plan for that situation.

It appears that they have LTC insurance, which should help.

Another consideration is how much assets they have. If they own several $MM in assets at 65 and they do know they will not spend much of their assets (due to SS and pension), then between those assets and the LTC... they are unlikely to exhaust their funds and qualify for medcaid anyway. Extremely long Nursing Home stays occur, but they are not the norm. I read that the average elderly person is in a NH about 2 - 3 years before they pass on. That is an average and there can be other circumstances but it is helpful information for planning purposes. Plus your PIL will know their health situation which is the other key planning element.