It’s important to understand the medicaid gifting rules. If you are admitted to a nursing home, you will usually want to qualify for Medicaid benefits as soon as possible. However, even if you qualify in all other respects, if you have made a gift within five years of applying for Medicaid, you may not qualify. The PA Department of Human Services will penalize you one month of ineligibility for every $10,043.28 you gave away.
What if the gift you gave away had nothing to do with qualifying for Medicaid? For example, what if you made a gift to your son to help him through a divorce, and then had a stroke which resulted in your admission to a nursing home? Pennsylvania would likely impose a penalty based on the gift to your son.
To avoid the penalty, you will need to prove that you made the gift for a reason other than to qualify for Medicaid. The burden of proof will be on you and it can be difficult to prove. However, the following evidence can be used to prove that the gift was not made to qualify for Medicaid.
1. You were in good health at the time of the transfer. It is important to show that you did not anticipate needing skilled care at the time of making the gift.
2. You have a history of giving. For example, you have given your family annual gifts during the last several years.
3. You had substantial other assets at the time of making the gift. If you had given away a substantial portion of your assets, this would be evidence that you were anticipating needing Medicaid in the near future.
4. The gift was made solely for estate/tax planning purposes on the advice of your attorney/accountant.
Proving that a gift was made for a purpose other than to qualify for Medicaid can be difficult. If you’re concerned by how the medicaid gifting rules will interpret your prior gifts and are now applying for Medicaid benefits, you should consult your elder law attorney.