A legal question and answer line for Seniors.

 

DEAR SENIOR LEGAL LINE:

 

Please answer my question about Medical Assistance and gifting. I want to give money to my children but I am worried about what would happen if I later need to go into a nursing home and needed Medical Assistance to pay for my care.  I have enough assets to pay for approximately one (1) year of nursing care. Beyond that, I believe I would have to apply for Medical Assistance to pay for my long term care. I worry that a gift to my children would make me ineligible for Medical Assistance. Is this true?

 

Signed, Elaine

 

DEAR ELAINE:

 

No matter how old parents become, we seem to have a natural inclination to give things to our children. However, you are right to be concerned about Medical Assistance whenever any gifts are made.

 

Medical Assistance is the federal program (administered by the state of Minnesota through its individual counties) that pays for long-term care for people who meet its eligibility guidelines. For example, a single individual can only have $3,000 in countable assets in order to be eligible for Medical Assistance. Because the program has income and asset guidelines, there are penalties if you give away assets. The general penalty resulting from a gift is that you will be ineligible for Medical Assistance for a period of time, based on the value of the gift, from the date of your application for Medical Assistance.

 

In 2006, Medical Assistance rules were modified in order to further discourage gifting. This new law was called the Deficit Reduction Act of 2005. For all gifts made after the effective date of February 8, 2006, the new rules apply.

 

Among the new rules resulting from the Deficit Reduction Act, are that the Alook-back@ period is scheduled to be expanded to five (5) years, that the ineligibility period resulting from a gift will start to run from the date of application for Medical Assistance, not from the date of the gift, and that even small gifts count against you. Please note that the look-back period is gradually being phased in. Currently, when you apply for Medical Assistance, the County will look back a period of three (3) years from the date of application to see if you have made any gifts. This look-back period will be gradually increased one month at a time starting in February 2009 until it reaches the full five (5) year look back period in February 2011.  The answer to your question then is that if you give a gift now, the penalty period effectively hangs over your head for up to five (5) years from the date you gave the gift because if you apply for Medical Assistance within five (5) years of the gift, the County is going to see that gift and calculate the length of your ineligibility period.  You will be deemed ineligible for some period of time, running from the date of the application.

 

At the time of your application you would have already spent down to your eligibility limit and most likely would not have enough assets to pay for your care during the ineligibility period. For example, as a single individual, you can only have $3,000 in countable assets. Obviously, $3,000 will not buy you a lot of long-term care.  If you do not have the assets to pay for your long-term care during the ineligibility period, a few things may happen. For example, the County may make a determination that your health is in danger and that you need your long-term care. The County may pay for your care with Medical Assistance benefits, but then they will contact the people who received the gifts and require that they give them back to you. If those people no longer have the gifts, the Medical Assistance rules allow the County to take legal action against the people who received the gifts.

 

As with any government program, if you have been denied Medical Assistance for any reason, you have the right to appeal the denial.  In order to preserve the right to a hearing, your appeal request must be submitted quickly (within 10 days in order to continue to receive benefits pending the appeal).  If you have any questions about appeals, I encourage you to either contact us or another attorney.

 

In conclusion, gifts are still made, but you must be even more careful about them. If you give a gift, everyone must be aware of the Medical Assistance consequences. I recommend that you speak with an attorney before you make any gift. Ideally, you will be able to outlast the five (5) years from the date of the gift and not need Medical Assistance to pay for your long-term care.  But just in case you do, a safer way of giving gifts is to make sure that you trust your child not to spend the money. Then, if Medical Assistance has denied you because of the gift, the child has the gift available to give back to you to erase the ineligibility period and/or to pay for your care during the ineligibility period.  One way for the child to safeguard the gift in case it needs to be given back is to place it in a bank account in the child=s name only, to not commingle any other money in the account, and to not touch it until at least five (5) years from the date it was given to the child.   Medical Assistance is a complicated area of law, and I encourage you to contact us and/or an Elder Law attorney for more information.