Are charitable contributions taken into consideration for 5 year look back? What if a person gives to a charity on a regular basis? What about a one time gift?
Yes, charitable contributions are taken into consideration when it comes to Medicaid’s 5-year look-back period. In fact, all transactions, no matter how small, that have been made within 5-years (2.5 years in California) immediately preceding one’s Medicaid application are scrutinized. This is done to ensure no assets were given away to meet Medicaid’s asset limit, and if this has been done, there will be a period of Medicaid ineligibility. (In most states the asset limit is $2,000. To see state specific asset limits and non-countable assets, click here).
Unfortunately, Medicaid does not extend an exception to the look-back period for charitable contributions, as Medicaid assumes any gift is given with the intention to “spend down” assets to meet the asset limit. This means that giving to charity during this time frame can result in a denial of Medicaid benefits. While charitable donations are sometimes exempted (not counted), the Medicaid applicant must prove that the gift was for another purpose other than qualifying for Medicaid. That said, it is very rare that a large, one-time donation would be exempted. On the other hand, if the individual gives to charity on a regular basis, this is more likely to be exempted, particularly if there is a long history of giving to the charity.
An important note: The transfer of assets are not treated consistently across the states, and one should not give to charities with the expectation that the donations will be exempt from Medicaid’s look-back rule. If you are thinking about making a charitable contribution and plan to apply for Medicaid within 5 years (2.5 years in California), it is vital that you know how charitable donations are treated in the state in which you reside. If you have already been making donations to charity and wish to apply for Medicaid, it is also important to be aware of how donations are treated in your state. It is recommended to contact your state Medicaid office or contact a professional Medicaid planner.