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Medicaid Gifting Rules in 15 minutes. (and you thought calculus was hard to understand). Bench Bar Conference Allen County, Indiana February 8, 2013. www.dhblaw.com. LookBack and Penalty Period. Lookback : 5 years for transfers after 11/1/09.

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medicaid gifting rules in 15 minutes
Medicaid Gifting Rules in 15 minutes

(and you thought calculus was hard to understand)

Bench Bar Conference

Allen County, Indiana

February 8, 2013

www.dhblaw.com

lookback and penalty period
LookBack and Penalty Period
  • Lookback: 5 years for transfers after 11/1/09
  • Penalty Period: No limit if you file for Medicaid within the lookback period
date of gift pre november 1 2009
Date of Gift: Pre NOVEMBER 1, 2009
  • Gifts do not have to be disclosed unless made from a trust
  • Penalty period started the month after the gift was made so a gift from trust of less than $200,000 will not create a problem
post november 1 2009 gifts houston we have a problem
Post November 1, 2009, Gifts--Houston We Have A Problem--

Compute The Penalty…

  • Add all “nonexempt transfers” made after October 31, 2009, together (will be full five years as of November 1, 2014)
  • Subtract gifts of $1,200 per year, total, to family members
  • Divide total by $5353 (current average cost of nursing home care) to determine penalty period
  • Round up fractional amounts 2 decimal places, then multiply fractional amount by 30.42 and round up
post november 1 2009 gifts houston we have a problem1
Post November 1, 2009, Gifts--Houston We Have A Problem--

Start The Penalty…

  • Mom must be in nursing home or approved for Medicaid Waiver;
  • Mom must be eligible for Medicaid—non-exempt resources less than $1,500;
  • Mom must apply for Medicaid;
  • Mom must get approved for Medicaid; except for the gift;
  • Penalty period does not stop once started.
post november 1 2009 gifts houston we have a problem2
Post November 1, 2009, Gifts--Houston We Have A Problem--

Example…

  • Mom gifts:
    • $10,000 to son on 11/1/09
    • $10,000 to son on 11/1/10
    • $10,000 to son on 11/1/11
    • $10,000 to son on 11/1/12
  • Total gift $40,000 – ($1,200 × 4) = $35,200
  • $35,200 ÷ 5,353 = 6.575 Mom ineligible for Medicaid for nursing home care or waiver services for 6 months, and
  • .58 × 30.42 = 17.64 = 18 days
post november 1 2009 gifts houston we have a problem3
Post November 1, 2009, Gifts--Houston We Have A Problem--

Exempt Transfers

  • Purpose of gift is for a reason other than to qualify for Medicaid
  • Gifts to disabled children
  • The home (certain circumstances)
  • Return of gift
  • Funeral trusts for family members
  • Household goods worth up to $2,000 total
post november 1 2009 gifts houston we have a problem4
Post November 1, 2009, Gifts--Houston We Have A Problem--

Traps for Estate Planners

  • Annuities—name the State of Indiana as beneficiary
  • Promissory notes
  • Family loan
  • Improper purchase of life estate in family home