At Scott Counsel, we pride ourselves on our extensive knowledge of difficult subjects, such as Medicaid, for example. It can be incredibly mind-boggling to try and understand when you already have so much on your mind as it is. So, we want you to know that what you think you know about Medicaid exclusion gifts and how they relate to the Medicaid look back period could be wrong.
To illustrate, many people often are under the mistaken belief that by gifting (or giving away) an amount of money that is equal to the annual gift tax exclusion ($15,000 as of 2018), that gift will then be excluded from Medicaid’s look back period, thus phasing out a waiting period prior to receiving Medicaid benefits.
Unfortunately, this is not true.
What you need to know about the gift tax is that it is a rule imposed by the IRS. This means that anyone who gifts an amount of $15,000 or less doesn’t need to report it to the IRS. They do, however, have to file a gift tax return if any amount above that number is given to anyone other than a spouse. Keep in mind, though, that you won’t necessarily pay a gift tax, and you’ll only need to do that if your total lifetime exemption is $5.49 million.
It is also important to note that this rule from the IRS is not related in any way to the asset transfer rules imposed by Medicaid. So, while the $15,000 that you can gift to a grandchild or someone else will be exempt from a gift tax, it will still be counted as a transfer by Medicaid, and this could create an ineligibility period for you when it comes to receiving benefits—though only if you apply within the next five years.
As we said, this can be a very confusing topic, but you don’t have to worry.
If you or someone you love needs assistance with Elder Care law issues, call 856-281-3131. Let us help ease your stress and give you a plan.