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I'm not sure if the 13k gift you mention has to do with monies that the person who is applying for Medicaid gave to someone or received. Either way, I would think that if either occurred within 5 years of applying for Medicaid then it may be considered an asset and potentially subject to spend-down or even a penalty (I don't know much about penalties, but our case worker has mentioned it in passing on many occasions). The rules vary from state to state, my experience is based on New Jersey. If you don't feel comfortable discussing with a Medicaid case-worker, definitely try to talk to an attorney that is well versed in elder care and/or estate planning.
Sorry to be long-winded. Hope this helps.
Hope this helps!
1. $13,000 gift exemption: This figure relates solely to a Federal GIFT TAX exemption and has no relation to Medicaid rules. Anyone concerned with Medicaid coverage will never make anywhere near the $5,120,000 of lifetime gifts permitted before a federal gift tax is due! Thus, for all practical purposes, the $13,000 limit can be ignored for anyone worried about Medicaid.
2. 5-Year Lookback: As stated by others above, when a person makes a gift of virtually any amount within the 5-year period preceding the date that person applies for Medicaid, those gifts are added together and will result in a disqualification period. The length of the disqualification (or "penalty") period depends on the total amount of the gifts made within the 5-year period and also the penalty divisor of the state where they are applying for Medicaid. For example, in a state where the penalty divisor is $5,000, if the total gifts made within the lookback period equal $50,000, then the penalty will be 10 months.
So the bottom line is that there is NO minimum amount a parent can gift their children to avoid the 5-year lookback period. But once 5 years has passed following a particular gift, that gift will no longer count when the person who made the gift applies for Medicaid.
I hope that helps!
Because of this, Medicaid rules are determined by each state & are state specific under a federal "umbrella" of guidelines. So how it runs in GA will be different yet sometime similar than TX program. A lot of what happens, especially after the Medicaid recipient dies, is very much dependent on what the states view is on property rights, estate/death, probate laws, etc. Yep, confusing.
For NH Medicaid eligibility, an individual must show that:
1) are 65+,
2) medical condition requires that level of nursing care,
Just being old, having dementia, etc. may not be enough.
3) monthly income at or below their states max (about 2K),
This is the “income test”– how much $ do you make. Texas is $2,094.
4) all countable assets are at or below 2K
This is the “asset test” – how much $ do you own.
5) not gifted away anything of value during 5yr look-back period.
If you do, there could be a “transfer penalty” when items are gifted. Penalty different for each state as it’s based on each state’s NH reimbursement rate. For Texas, it is $ 142.92 a day rate.
Max look-back is 5 yrs. Most states require 3 – 6 mo. of financials along with all life funeral, burial & health insurance policies with initial Medicaid application. The NH usually submits the application with whatever documents you give them along with their request for payment from the state. The state can require more financials if something pique’s interest or something is unclear.
INCOME: This is their SS monthly check and any retirement or other $ paid to them on a regular basis. The max is basically 2K, & each state has it's own specific amount. If there is a community spouse, the income allowed is different.
If it is that every month they are over the states income limit BUT not enough to pay in full for the NH and qualifies for NH in every other way, then they can see an elder care attorney to do a "Miller Trust" or a "Qualified Income Trust". Say mom gets 1K from SS & 1,500K from retirement every mo. Income = $2,500. Basically is $ 500 over ceiling for monthly income. No matter what is always is $500 over. So this excess $ 500 is what funds the trust and therefore mom’s income is now 2K and within the states income ceiling. The beneficiary of the trust is state's Medicaid program and upon death reverts to the state. Miller really has to be done by an attorney who does elder law as it needs to be flexible/adaptable and meet the criteria of each state's law on probate (death laws) & Medicaid rules.
ASSETS: All assets are counted, unless the assets fall within the short list of "noncountable" assets. The noncountable's are:
- personal possessions,
- a vehicle (some states have a limit on the value)
- their principal residence, provided it is in the same state in which the individual is applying for coverage & the house may be kept with no equity limit if "community spouse" lives there; otherwise the equity limit is 500K (750K in some states)
- prepaid funeral (irrevocable, NCV, usually 10K max)
- small amount of term life insurance (usually $1,500 & NCV)
All other assets (savings, stocks, cash value insurance policies, rental property) are counted.Must “spend down” to get to their states max (+/- 2K) to qualify.
The financials are what most folks focus on. But remember that they also need to medically qualify for skilled care for Medicaid.
Most NH admissions come from a hospital discharge. If an individual covered by MediCARE is discharge from a hospital to a nursing home for continued care (rehabilitation) after an inpatient stay of at least 3 days, Medicare will cover 100% of the first 20 days and MAY pay up to 100 days, subject to a co-payment by the patient of $141.50 per day for days 21 to 100 (for 2011). Medicare does not pay for the many months/years that some people reside in a NH for long-term custodial care. In general, Medicare is limited to short-term acute care. But this MediCARE paid time in NH is when you need to get the documents together to apply for MedicAID if you need to go that route. Good Luck & keep a sense of humor.
Good luck all.
Did not have to deal "community spouse" but one of my high school friends who's mom is 1 block over from my mom's house did. Here's what she told me:
COMMUNITY SPOUSE: For couple's, Day 1 of "institutionalization" (day one when 1 of them entered the NH) is the key date for finances, the "snapshot" day. Where all their finances & assets are as of that day are "set". So you kinda have to be on top of making sure all checks are cleared or money spent and out of the bank accounts before Day 1.
If your parents have assets they are expected to do private pay @ the NH or "spend down" assets to get to their state's couples asset ceiling to be Medicaid covered. For couples, your mom would be a "community spouse" as such the asset ceiling is higher and is limited to ½ of couple's joint assets.This is “spousal protected resource allowance” equal to one-half of the countable resources but not more than $109,560 in 2011. I think it’s this amount for all states???.
The "spend-down" for couples kinda needs to be done differently if the spouse is staying at the house in order to have the best use of $$. If they have a home, prepay for utilities, cable, insurance, do repairs, replace appliances. If your mom is planning on staying at the home, spending down by paying off the mortgage, is often a super good plan as this is usually a big chunk of $$. It took them almost 4 weeks to clear the mortgage so planning ahead is really important.
For spouse's there's other issues, like how to deal with income if she still works or if she never worked and her only income is his SS &/or retirement and she need's to get a MMMNA - minimum monthly maintenance needs allowance. (Say that 3 times fast!) These are all sticky, you'll likely need someone to work with you in figuring that out like an elder care attorney. The MMMNA is based on your state's AVERAGE and seem to be on the low pitiful side. Often the CS will have to do an appeal to the state for more MMMNA or get a court order for spousal support to get more monthly support. My friend's mom had to go to court to get the MMMNA increased because of the cost of repairs to the house after a hail storm.
Transfer penalty: For couples, getting rid of the extra unneeded car (as dad is in the NH so no more driving) is often the glitch as they give it to one of the kids for free and then have a Kelly blue-book based Medicaid transfer penalty for the value of the car hit them 3 -5 months later. Property ownership is recorded by the state so it's easy for Medicaid to do a cross check for registration and sales, but the state moves glacially so it might not show up in the initial review of the Medicaid application. So that 20K car is 4 mo. penalty if your states NH avg cost is 5K a month. For couples, it's kinda better to turn in both cars and get 1 newer, more dependable one for the still at home spouse to drive and also as the car is an allowable exemption when & if they ever go into a NH later on.
Being "community spouse" really is a whole different mindset in how to handle. The big thing for Carol was that they didn't think about was what would happen if mom should die before dad, and their will was like most couple's wills...where the surviving spouse inherits all...this totally changes the dad's assets.Then the NH spouse inherits all and then becomes disqualified from Medicaid because now they have all of CS assets,so state goes after all money from the CS inherited assets to reimburse for the NH spouse expenses. It's the sort of thing you don't think about especially if the CS is much younger. But stuff happens. What they need to do is to have an attorney do a separate property agreement so that everything is owned by the community spouse (acceptable under their states Family Code) and change the will so that the heirs to the community spouse is NOT their spouse in the NH. Or have it so that the kids are the CS heirs and set up a "special needs trust" for the NH spouse that runs only for their lifetime. Again, all this really needs to be done by elder care or a good estate attorney.
Oh and when they paid off the mortgage, they got hit with an early payment penalty as it was before the 30 yr run for the full mortgage. She told me that they could have challenged it and worked it out but it would have dragged it on for another month and they needed the $$ cleared asap before snapshot day 1.
The timing requires that you live with her for at least two years, she moves into the nursing home, she transfers the house to you.
What does vary from state to state is the treatment of the underlying real estate itself, whether it is a countable asset or not. Some states exclude it, some don't.
As for NY state, I'm not a NY attorney and cannot answer that question. Maybe a NY lawyer can post the answer here or you can do some further research on your own. Sorry about that.
If I proceed to having a Special needs irrocable trust set up along with living will, POA , etc. the total cost will be $5,600.
I'm scared to death to go ahead with this as even though expained to me. it just seems much too complicated !
I am in process of selling my home & going into a over 55 residendial rental to make life easier for me.
I am 80 y.o.
The money aspect , spend dpwn is just so hard to understand.
What about my rental , utilities, normal expenses ? The cost of rental alone is $1300./mo.
We do need some easier to grasp info !
Thank you for this great informational "Aging Care " !
Very confusing to most of us.
I've been told that if I set up an irrevocable special needs trust for my adult disabled daughter, the 5 yr. look back will not apply.