Giving a perfect, generous gift feels great. But giving a gift that’s too generous could backfire in a way that has lasting and expensive repercussions, if it disqualifies you from getting the nursing home care you need.
Massachusetts residents who need or will soon need nursing home care have to be careful about making large gifts. MassHealth (our Medicaid program) looks carefully at every applicant’s financial records. Those who have given away too much money in the previous five years will be disqualified.
Sound unfair? Being questioned about how you’ve spent your own hard-earned money might make you bristle, but keep in mind that MassHealth is a welfare program. Its goal is to help as many needy people as possible, and so the program has rules in place that prevent a person of means from qualifying. If you can pay for nursing home care yourself, MassHealth won’t foot the bill.
The look-back period for MassHealth is five years. When you apply for benefits, expect MassHealth to scrutinize the past five years of your finances. Specifically, MassHealth looks at transactions that exceed $1,000. If you spent the money on yourself, no problem. Large transactions made on someone else’s behalf – like if you bought a relative a car or wrote a large check to a friend – are a different story. They’re considered gifts.
An applicant who has given away $10,000 or more over the previous five-year period is ineligible for MassHealth benefits. (That’s the average cost of one month in a Massachusetts skilled nursing facility.) That could be devastating news for anyone who has run afoul of the gifting rule without realizing it. If, for example, you paid $2,000 for a grandchild’s plane ticket a few years ago and paid $9,000 to help a sibling make home repairs last year, MassHealth will deny your benefits application – even though that money is gone and you can’t use it to pay for nursing care.
But all hope is not lost. If you can’t afford the care you need without MassHealth, you have a few options. One option is for the gift recipient to return the money. MassHealth considers this a “cure”; basically, it’s as if the gift never happened. If the recipient can only afford to pay back some of the gift, that partial cure may be enough to put you back the acceptable range.
(Going this route does add one more complication. MassHealth allows benefits recipients to have no more than $2,000 in countable assets, so getting that gift money back may put you over that limit. That can be fairly easily fixed if you spend the excess money on your care until your assets are back under the $2,000 mark.)
Of course, it’s not always possible for the recipient to return the money. Your options are limited in that case, but a financial planner can help you explore them.
If you don’t yet need nursing home care, you’re in the best position of all. There’s still time to make the moves that will help you get approved for MassHealth coverage. Contact Ladimer Law to get started.
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