Some More Medicaid Myths
1. Myth: “I can hide my assets and get eligible for Medicaid.”
The Truth: Intentional misrepresentation in a Medicaid application is a crime and can be costly. The IRS shares any information concerning income or assets you have with the Medicaid agency. These reports include interest income and the sale of stocks or bonds. You or whoever applied may have to pay Medicaid back to avoid prosecution.
2. Myth: “I can give away $10,000 per year under Medicaid rules.”
The Truth: This is a rule under federal gift tax law, not under Medicaid law. (Actually, the amount has changed to $13,000.) In 2011 a person may give $13,000 per year without liability for gift tax. However, since taxpayers have a $1 million lifetime exemption for the gift tax most do not need to be concerned paying the tax. And, millionaires should not worry about getting Medicaid.
3. Myth: “I can’t give anything away and get Medicaid.”
The Truth: The Medicaid rules provide that a person can be disqualified for giving away property. It depends on what is given away, to whom, and when. So, again, it’s complicated. Some asset transfers are not penalized under the Medicaid rules. Consult with a lawyer who knows the law.
4. Myth: “I have to wait 5 years after giving anything away, to get Medicaid.”
The Truth: The disqualification isn’t always 5 years long and sometimes there is no disqualification at all. True, there is now a 5-year “lookback” for some asset transfers under the Medicaid rules. This means that the Medicaid agency will look back at all transfers of property, including sales for less than market value.Tags: federal gift tax law, five year lookback period, medicaid, medicaid application, medicaid disqualification, medicaid eligibility