A legal question and answer column for seniors.

 

DEAR SENIORS LEGAL LINE:

 

   My grandchildren are in college, and I would like to give them some money in order to help pay their tuition.  I am not a rich person, but I have about $20,000 and I would like to give a total of $10,000 to them.

   I have heard that giving gifts of money may make me ineligible for Medical Assistance to help pay for the cost of care if I have to go into a nursing home at some point. I am 80 years old, but I feel that I am in fairly good health for my age.

   Would there be a problem with making these gifts?

 

Signed           Edna

 

DEAR EDNA:

 

  As you may have seen in the paper, there is something called the “Deficit Reduction Act of 2005" that has recently passed by close votes in both the Senate and the House of Representatives.

   President Bush signed this Bill into law on February 8th, 2006. This new law will impose significant changes in Medical Assistance (also known as Medicaid), including the provisions about gifting.

   For example, it is my understanding that in Minnesota the look-back period for gifts will now be 5 years rather than 3 years. This means that any gifts that were made within 5 years prior to the date of application for Medical Assistance to pay for long-term care will be scrutinized to see if there is going to be a penalty period of ineligibility resulting from the gift(s).

      The new law also provides for a change in the penalty start date.  Because Medical Assistance does not pay for your cost of care during a penalty period, this is an even more significant change, as the penalty period will now start from the date a person enters a nursing home and would otherwise be eligible for Medical Assistance. Previously, the law provided that the penalty period would start from the date of the gift and therefore could have run out before the application, or have only a portion of the ineligibility remaining.  Now the penalty period will sit in the background, waiting to cause ineligibility for a person applying for long-term care Medical Assistance (if the gift was made within the 5 years prior to the application).

   This is a fundamental change in the treatment of gifts (also known as transfers of assets) for persons who may have to go into nursing homes. Previously we could advise people that they could give away up to the average cost of a month of nursing home care each month, and still be eligible after the following month. This is no longer true.

   It is my understanding that these fundamental changes are already in effect, because President Bush signed it on February 8, 2006. Therefore, you may wish to re-think your proposal to gift several thousand dollars to help your grandchildren with their college expenses.

This column is written by the Senior Citizens’ Law Project. It is not meant to give complete answers to individual questions. If you are 60 years of age or older and live within the Minnesota Arrowhead Region, you may contact us for legal help or questions by writing to: Dale W. Lucas, c/o Senior Citizens’ Law Project, Legal Aid Service of Northeastern Minnesota, 302 Ordean Bldg., Duluth, MN  55802.  Please include a phone number and return address.