Charitable Giving: When Generosity Could Disqualify You from Medicaid Eligibility
Gift giving can be a risky venture for people who may need Medicaid coverage within five years.
For example, Jennifer and Ryan recently got married and her grandparents Rose and Lou would like to give them a Christmas gift of $10,000 for their nest egg. If Rose’s health suddenly declines and if she requires nursing home care next year, would she be penalized for the gift she gives to her granddaughter?
The answer is YES. Medicaid presumes that all gifts made in the 5 years prior to filing for Medicaid were made in contemplation of applying for Medicaid. Individuals seeking eligibility for long-term care Medicaid benefits must disclose all gifts made by the individual or his or her spouse within the prior 5 years. Medicaid presumes that gifts made within 5 years of the eligibility request date were made in order to qualify for benefits.
If you have a history of giving small weekly or monthly gifts to a charity, most Medicaid offices will not construe those to be disqualifying gifts. For instance, in Virginia, these types of regular gifts are not penalized so long as they are under $2,000 per year and there was a regular pattern of making this gift for years prior to applying for Medicaid.
Does this potential risk of a Medicaid penalty suggest that all giving should cease? Not necessarily. However, those who may need nursing home care within the next five to ten years must weigh the joy of giving against the potential cost of losing much-needed Medicaid benefits.