Giving a car to a family member when applying for Medicaid

Yes, your mom could potentially be denied Medicaid (or lose her Medicaid benefits) if she gifts her car to a loved one or sells it. However, several factors come into play, which we will cover in more detail below. 
 
To begin, for a senior to be Medicaid-eligible, they must meet the Medicaid eligibility criteria, one of which is an asset limit. While asset limits are state-specific, the majority of states set their limit at $2,000. Some assets, however, are exempt from this limit. In other words, they are not counted towards Medicaid’s asset limit. This includes one automobile. While a state may have state-specific requirements regarding car exemption, generally a vehicle is exempt regardless of value, given the Medicaid applicant / beneficiary or someone else in their household uses it for transportation. 
 
But what happens if one gifts their exempt car? Unfortunately, gifting an exempt vehicle can violate Medicaid’s Look-Back Period, resulting in Medicaid denial or the loss of Medicaid benefits. For long-term care Medicaid, there is a 60-month “look back” immediately preceding application, during which the Medicaid agency scrutinizes all asset transfers. If assets have been gifted, one is penalized with a Penalty Period of Medicaid ineligibility. Even after becoming a Medicaid beneficiary, a state will check to ensure one has not gifted assets during the previous year at their annual Medicaid redetermination. If one has gifted their car, they will likely be penalized. There are, however, some exceptions when it comes to gifting an exempt car. Washington is one such state, allowing an exempt vehicle to be gifted without being penalized. 
 
And what happens if one sells their exempt automobile? First off, one must sell it for fair market value. Simply put, this is the amount a buyer would be willing to pay a seller in the current market for an automobile of the same year, make, model, and condition. Selling a vehicle for under fair market value can violate Medicaid’s Look-Back Period. Essentially, the amount for which a vehicle is undersold is considered a gift. Note: Kelley Blue Book can be a good tool to use to help determine a vehicle’s fair market value range. Additionally, if proceeds from selling one’s vehicle causes one to exceed their state’s asset limit, they must “spend down” the money the same month of receipt. If they do not, the money will count as assets the following month and could cause one to lose their Medicaid eligibility. If this happens, one will have to reapply for Medicaid once their assets are at, or below, the allowable limit in one’s state.