Qualifying for Medicaid using “Gift and Return”
qualify for Medicaid, to pay for nursing home costs, you must meet three
criteria. First, you must require skilled care or cannot perform activities of
daily living. Second, your monthly income must be less than the monthly nursing
home cost. Last, you must have less than $2,500 in assets.
you have made any gifts, in the last five years, from the date of the Medicaid
application, you will be penalized. The Department of Social Services state
that the “gifted assets should have been used to pay the nursing home costs.”
Consequently, you are ineligible for Medicaid during the "penalty
period," depending on the amount of the gift.
using the Medicaid rules, the "gift and loan" strategy is explained.
the "gift and return" strategy, the parent makes a gift to child of
the total amount of assets, say $68,000. The gift of $68,000 creates a penalty
period of 10 months, calculated by dividing the gift of $68,000 by $6,800, the “average
cost” of nursing home care in Maryland. Consequently, parent is ineligible for
Medicaid, during the penalty period. However, child pays back $34,000. Over the
next 5 months, parent uses the returned gift plus her income, to pay the
nursing home costs. When parent makes the last payment, the penalty period
expires and parent qualifies for Medicaid. Therefore, child keeps the remaining
$34,000 gifted amount.
Avoid the five year look
back period. Plan ahead with a Medicaid Irrevocable Asset Protection Trust.
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