Can My Elderly Parent Gift Their Assets to Me to Become Eligible for Medicaid
Much too often, older adults do not plan for the future possibility of needing nursing home care or another form of long-term care, even though a large portion of older adults will require it at some point as they age. Nursing home costs are extremely high — much more than you or your elderly parent might think. According to data from Genworth, the annual cost of a private room in a nursing home in Connecticut totaled nearly $200,000, and that annual cost has increased — and will continue to do so — with inflation. That comes out to a monthly cost of more than $16,500 for a private nursing home room, making Connecticut the fourth-most-expensive state in the nation when it comes to nursing home care.
In order to pay the high costs of nursing home care, most older adults in Connecticut want to become eligible for Medicaid. Medicare — distinct from Medicaid — does not cover the costs of nursing home care or other long-term care. Yet in order to be eligible for Medicaid, an older adult must have limited assets since Medicaid is designed for individuals with limited assets. With that in mind, an older adult might think it makes sense to gift large assets to an adult child in order to become eligible for Medicaid. Yet this would be a serious mistake that could incur significant penalties. Our Connecticut elder law and asset protection attorneys can explain in more detail.
Penalties for Gifts During the Medicaid “Look Back” Period
In order to be eligible for Medicaid to cover nursing home care, a single older adult must have a total income that is less than the cost of the nursing home and an asset limit of $1,600.
However, you should never spend down to the asset limit by gifting major assets to adult children or family members. In Connecticut, there is a five-year “look back” period in which Medicaid will assess any property transfers that were not sold or exchanged for fair market value. If such gifts were made, the elderly adult who made the gifts will be subject to a Medicaid penalty period. Accordingly, it is essential to avoid this.
Gifting Alternatives to Become Eligible for Medicaid for Nursing Home Care
Rather than gifting assets, there are many alternatives to consider, which may include:
- Spending down on non-countable assets (such as real estate where the person resides, certain personal assets and household furnishings, necessary medical equipment, automobile, and much more); and/or
- Creating a Medicaid asset protection trust.
Contact a Canton Elder Law and Asset Protection Lawyer to Discuss Medicaid Planning in Connecticut
If you have an elderly parent who is expecting to soon need nursing home care, and who wants to become eligible for Medicaid and to avoid having to spend down assets on the high costs of the nursing home, it is crucial to avoid any large gifts in order to spend down. As we discussed above, your elderly parent can be penalized as a result of making a gift during the “look back” period and will risk Medicaid eligibility. There are other ways that your elderly parent can spend down without risking Medicaid eligibility and without having to spend their hard-earned money on the high costs of a nursing home stay. An experienced Canton elder law and asset protection attorney at the Law Office of Brian S. Karpe can speak with you today about potential options. Do not hesitate to get in touch with us to learn more about how we can help your elderly parent with asset protection strategies.
Sources:
portal.ct.gov/HUSKY
investor.genworth.com/news-events/press-releases/detail/1013/long-term-care-costs-increase-in-connecticut-exceeding
