Visitor asked 5 years ago
How does giving Christmas gifts impact Medicaid eligibility? My mom has always given her grandchildren presents; will this affect her Medicaid eligibility?
medicaidplanner Staff answered 5 years ago
As with many Medicaid related subjects, there is not a simple answer to this question. Depending on the state in which a senior resides, and the value of the gift, giving Christmas gifts (or birthday / graduation gifts) can result in Medicaid ineligibility.
Medicaid has a Look-Back Period of 5 years that immediately precedes the date of one’s Long-Term Care (LTC) Medicaid application. All asset transfers during this timeframe are scrutinized to ensure that assets were not given away or sold for less than fair market value. If they have been, it is assumed it was done to meet Medicaid’s asset limit, and hence, be eligible for LTC Medicaid. Violating this rule can result in a Penalty Period of Medicaid ineligibility. See state-specific Look-Back Rules.
Christmas gifts, as well as gifts given for other special occasions can be seen as a violation of Medicaid’s Look-Back Rule. However, if one can prove that the intent of the gift was for another purpose, such as for Christmas, the gift may not be considered a violation of the Look-Back Period. For instance, if a Medicaid applicant writes a check to their adult child every Christmas, and has done so long before the 5-year Look-Back Period, this could serve as sufficient proof that the gifts weren’t given for the purpose of meeting Medicaid’s asset limit.
Even small gifts can result in a period of Medicaid ineligibility. Therefore, it is always best to error on the side of caution. Awareness of the Medicaid gift giving rules in the state in which one lives can be extremely beneficial, as there will no longer be any question as to what is allowed and what is not. Some states do allow “de minimis gifts” (gifts that are determined to be of small value and are overlooked when it comes to the Look-Back Period).
For instance, Indiana allows one to gift up to $1,200 / year, and Virginia allows up to $4,000 / year to be gifted (as long as there is documentation that there has been a pattern of gift giving, such as for Christmas, for a minimum of 3 years prior to Medicaid application). Pennsylvania is even more lenient when it comes to gift giving, and allows up to $500 / month ($6,000 annually) to be given as gifts. Consult with a Professional Medicaid Planner in your area regarding gift giving rules.
Note that the Federal Gift Tax Exemption does not extend to Medicaid gift giving. Unfortunately, some persons mistakenly believe that it does and unknowingly violate Medicaid’s Look-Back Rule.