Dad is in a nursing home. My question is with Medicaid looking back 5 years once his money runs out, how much money is he allowed to gift now?

my question was about how much is allowed to gift for x-mas / Birthdays father is paying now in nursing home will go on medicaid when money runs out...... Its  just a shame you have money and you save your whole life for someday the nursing home will take your money...... my dad stopped giving my kids birthday presents not because he had no money because he was frugal with his money!! 

Just to add my Father took a horrible fall down the stairs one day & ended up in the nursing home for therapy but, unfortunately he is not able to walk now because of the fall. So it was a very unexpected situation. He has enough assets to last about 10 months so , he is paying. My question was not about how to CHEAT anyone. And his gift giving was definitely under $1,200 a year.

There is currently another thread with a person whose parent qualified for Medicaid. The person didn't understand that Medicaid would require that the patient in nursing home REQUALIFY every 1-3 years. The person is now scrambling to find receipts and records for expenditures. They can't find individual receipts although they have bank statements. And forget cash receipts to support withdrawals... And the patient is being told they may be denied the renewal.
I live in a RED state that declined expanded Medicaid. The list for disabled individuals for assisted living or community supported care is not even taking new applicants in some counties. My son has been on a list for supported housing for over 8 years. He is still not even up to the top 100 for our county. With the new budget requirements, and the tax changes being proposed in D.C., there will be LESS MONEY available through Medicaid programs from the federal government. Which means there will be less money available at a State, County and Local level. Which means that Medicaid case workers will be looking very closely at patterns of spending. In my state, de minimis is considered to be a gift of $25 or less to each person (same as business treatment by IRS) and the gifts should not indicate a pattern of divestment of capital to qualify for financial aid (quoting a case manager here).
No judgment here on how you spend money. Just trying to make you very aware that once Medicaid is on the horizon, you have to keep meticulous records, lists and receipts, and be aware that any expenditures will be scrutinized. Some family members that I know have started giving family heirlooms or interview tapes with family history as gifts "just in case". Some states have very generous support systems now. I don't anticipate that will last, and that's very scary as the daughter-in-law of a woman with Parkinson's in Medicaid covered assisted living that cannot manage without 24/7 oversight.

Jeannebgibbs.
Thanks for your answer & support. To blannie. My father WILL be paying his own way in the nursing home. But, when his $ runs out he will apply for Medicaid like a lot of people. So yes, when he has no money he will be supported by the tax payers. He worked his whole life& saved a lot of money. He wasn't over generous at all. He gave my son $200 as a wedding gift! That's his grandson! That was probably his only wedding in the past 5 years. He was not giving away his entire estate to cheat medicaid. A few graduations here & there. So, I guess if my Father decided to blow all his money on lavish items & fancy vacations his whole life like a lot of people I know! And then doesn't have a dime that would of been okay!

I have read that Federal law allows states to exclude certain transfers made for less than fair Market value called “de minimis gifts,” with the understanding that these transfers would not be presumed to be made explicitly for the purpose of future Medicaid eligibility. This varies by state. For example, Indiana Medicaid "excludes small gifts from the Medicaid transfer penalty system, but the total value of all such gifts must be $1,200 per year (that is a total of all gifts to all people as a single figure)."

So if your dad lived in Indiana, Subteacher87, if all of his $100 here and $200 there gifts did not exceed $1,200 per year for each of the 5 years, there would be no penalty on that gifting.

In Minnesota, gifts to churches or charities can be exempted if "the individual demonstrates a well-established history of making regular contributions to a religious or charitable nonprofit organization to which he or she belongs." In other words, if you have been giving to your church monthly for 17 years, it is not likely that you are doing it to get around Medicaid rules. But if if you give a very large amount the month before you apply, then that probably would be considered for a penalty.

States have some discretion in how they treat small or charitable gifts. It isn't easy, but try to research the practices and policies in your state for gifts made in the past.

Ginawins1, if Dad is on the verge of applying for Medicaid, he probably should not do any gifting at all, no matter what state he is in.

Blannie, are you currently giving gifts to friends and family for graduations, weddings, and birthdays? If you had some terrible accident next month and had to go through surgeries and rehab and then live in a care center, would you be able to pay for 5 years of that care center out of your own funds (after you have also paid for the other medical expenses)?

Medicaid is for people who meet certain financial and medical requirements AT THE TIME they apply for Medicaid. They don't require that you have been indigent all your life. The lookback period is to counteract the "cheats" who have deliberately gotten rid of their assets in order not to have to use them for their own care. The rules to do this also impact people who had no intention of cheating. They were just going about their lives when, bang, some serious and expensive condition (like dementia) hit them.

When we are answering questions about qualifications for Medicaid, I think we should refrain from implying anyone is a welfare cheat if they did normal gifting when they could afford it. There may (or may not) be some Medicaid penalty involved, but that doesn't prove or even imply moral wrongdoing.

Subteacher87 why should taxpayer's have to pay for your father's care for a month or two because he chose to gift hundreds (or thousands) of dollars to his family over the previous five years? If there's any question he'll run out of money, then he needs to hold on to his money for his own care. That money doesn't grow on trees - it comes from other taxpayers. It's great that your dad is generous, but he needs to hold on to his money unless he has a lot coming in and a lot of savings. Care in a facility can run from $3k to $7-8k (or more) a month. You can run through savings pretty quickly at that rate.

I can’t give you a definitive answer. The term is transfer penalty for gifting, which doesn’t just mean hiding assets. It means giving gifts for use of others which means less available for applicant to use for care. I’m not in charge of Medicaid. Some states are very strict; some impose penalties less often. But a person with large extended family in habit of giving $100-200 gifts could easily add up to thousands over 5 years. And Medicaid can be denied if you can’t produce receipts for expenditures to prove money was spent on applicant. It’s a welfare program with rules to be approved and a look back period because there were abuses. Current political climate is less funding, not more. Which usually means stricter rules.

Guestshopadmin , Thank you for the answer. What I think I'm confused about is, my dad is not on Medicaid. He will start private paying in a few days. And you mentioned if he's destitute then he shouldn't be giving gifts. But, he is not destitute & that is why he would go to a wedding & give $200. Was he supposed to go to a wedding & say, "well, sorry I can't give you a gift, I might be in a nursing home in 4 years." He will be paying the nursing home but, seems crazy that every graduation party, communion, wedding , over the past 5 years will be a penalty. And once he applies for Medicaid & he is broke how is he supposed to pay a penalty ? I'm not talking about him transferring thousands of dollars in my name. But, a wedding gift to a grandchild? Are they that strict? Going to an event and giving a gift is not trying to hide someone's assetts.

Not unless it is paid care thru agency or independent contractors.  It requires paid care that is documented by 1099 or W2 reporting to IRS. A person would have to provide proof that care was paid for in comparable dollars to offset penalty.

If the family has to pay medical expenses during the transfer penalty period, can they handle this by doing home care and not paying money to the nursing home? (I'm assuming that the elder is not already in a nursing home.)

This is a long answer, so get a beverage and comfortable chair. Medicaid is a federal and state program that is set up to cover certain medical and skilled nursing/housing needs for indigent people (that is, individuals that don't have sufficient assets and income to cover their own care). Unlike Medicare, Medicaid is NOT an entitlement program that individuals have paid into over the years that is guaranteed to be available once needed no matter what income levels that an individual has.
The penalty by Medicaid is a calculation that figures out how long Medicaid will be delayed for payment based on your state's daily Medicaid bed allowance. No money is required to be paid directly to Medicaid under the transfer penalty -- the individual simply has to come up with the money that was given away to pay for their own medical expenses that could have been paid for by Medicaid (assets that were given away that are no longer available to pay for medical expenses can be returned by the giftees). Say your state has $200/day allowance, and you gave away $2000 over the last 5 years, that is equivalent of 10 days. So person's penalty would be 10 days of care that would have to be privately paid before Medicaid would pay a dime. If State and Federal Medicaid didn't have transfer penalties, everybody would gift away all their money, apply for Medicaid as indigent, and states quickly would go bankrupt. What you consider to be a modest amount may not be considered modest by a case worker if the individual applying for Medicaid is doing it for a lot of people per year for years.
Please note, if married, a different set of rules about what is exempted regarding assets, etc. applies. Lawyers should be used if applying for married couples to make sure that whatever assets can be retitled or protected under state law are. If you are "single" which includes divorced or widowed, and if you qualify for Medicaid, you are exempted a house below a certain dollar amount in value that varies by state, a car with a value beneath a certain amount, a prepaid burial plan usually less than $1500, and liquid assets of typically less than $2000 (this includes bank accounts, annuities, 401K, pension funds if able to cash out, life insurance payable to estate and not a person, etc). Monthly income has to be below a state set maximum per month to qualify. Minimal gifts like $5-25 once in a while will probably not trigger a Medicaid penalty, but if you are making $100-$200 dollar gifts for 10-20 people every year? That's a lot of money that could have been saved to offset an individual's care before asking the state and federal government to cover expenses. A Medicaid case worker is going to take a look at the types of expenses, what they were for, and how much of other people's expenses an individual was contributing to for the last 5 years. And if you do get approved for Medicaid despite the gifting (if it's decided that it is nominal/small), there will be ZERO money available in future to the person for house expenses like property taxes/mortgage/repairs, car payment/repair/insurance/gas, or gifting to other people. Once a person qualifies for Medicaid, they are responsible for their "share of cost" to be paid out of their income with only a small personal needs allowance remaining. After share of cost is paid to the nursing home (or if you are on a Medicaid Waiver at home, the money is paid to caregiving agency, etc), there is only the personal care allowance left for monthly expenses. The personal care allowance remains in the person's control - usually $60-$100 per month. That covers hair appointments, cable, clothes, eating out, etc. The state/federal attitude is that if you are destitute enough to apply for Medicaid to pay for your expenses, you don't have money available to pay for gifts for other people. Yes, we want to be generous to family members; but if you don't have money for your own expenses you certainly don't have money to give to other people for whatever reason. Consult an elder care attorney experienced with Medicaid before applying if you think there are expenses that will cause a red flag, that is one expense that Medicaid doesn't question. Medicaid is a safety net for the poor, but it is one that has a lot of strings, paperwork requirements, and very little room for generosity to family members/church/etc.

Guestshopadmin, I asked a similar question. So, if my Father gave his grandson $100 for his birthday , that would be a medicaid penalty? He is not on Medicaid yet but, yes, of course in five years he has attended parties & has given wedding gifts of $200. How can Medicaid penalize for giving a wedding gift of a modest amount?

If he is on Medicaid NOW, he can gift nothing. You need to understand that Medicaid requires that you certify every 1-3 years and any gifting will show up. If he has not filed for Medicaid yet, then he cannot gift anything within 5 years of being ready to file for Medicaid. Any gifting or asset transfers need to occur 5 years plus before Medicaid enters the picture.