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Posts Tagged ‘gifts’

Providing Care Services and Being Paid By Your Parents?

    If you are providing care for your aging parent, and they are paying for your services, beware of the consequences. Medicaid, my treat the transfer of funds, from your parent to you, as a gift. Therefore, if your parents apply for Medicaid, to pay for the nursing home, they may be denied due to gifting.     To prevent Medicaid from treating payments to family members as a gift, there must be a written, contract between the parties. This “care contract” must be in place before the work is performed and must specify the services and amount to be paid. The…

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Gifting: Taxes And Charity Versus Medicaid

Many seniors are aware that some planning is necessary if Medicaid is to cover their skilled nursing care as they age and that making gifts of money or property to their loved ones before they need care can be part of that process. There are a few common misconceptions, however, about gifting and the Medicaid Process. Often, penalties resulting from these transfers could have been avoided if clients had been aware of the consequences of their actions. “I thought I was allowed give away $13,000.00 to each person every year.” This statement and action is a result of the misapplication…

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What is the look back period for Medicaid?

Pursuant to the applicable provisions of the Federal Deficit Reduction Act of 2005 (DRA 2005), the look back period for Medicaid is five years (60 months). That federal statute requires that any uncompensated transfer that occurred during the relevant look back period will cause a penalty period with regard to the receipt of Medicaid benefits. The penalty period is the amount of the uncompensated transfer ( say gifts of $68,000)divided by the state's reimbursement rate (Maryland is $6,800). The result is ten (10) months that will constitute the penalty period. The penalty period begins in the month in which the…

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Tax-Smart Giving

The bottom line, however, is that the IRS is watching, and you should be very careful and get good tax and legal advice before you make that gift.

Pitfalls of the nursing home five year look back period?

A five-year look-back period retroactively for all gifts or other transfers made for less than fair market value (FMV). Grandfather made gifts of $200 to each of his five grandchildren on each of their birthdays and on one of their religious holidays in 2006, 2007, 2008, 2009 and 2010. He is unaware of the Medicaid laws. Grandfather requires nursing home care. Under the Medicaid rules, Grandfather is penalized for all gifts made within a five year period. Therefore, Grandfather is penalized for approximately one and a half months, during which time Medicaid will not pay for his care in the…

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Compensation to Family Caregivers.

Growing numbers of aging parents are compensating their caregiving family members. However, it is important to disclose such caregiving agreements to the entire family, to avoid potential disgruntled and unhappy siblings, and the threat of a lawsuit. According to a report by the National Alliance for Caregiving and AARP, 43.5 million Americans looked after a friend or relative age 50 or older in 2009, 28% more than in 2004. "Obviously with the economy, we have seen many seniors retain their adult children rather than pay a home care agency or another person for their care,” states David Wingate of Senior…

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I’ve heard about Special Needs Trusts but what is a Pooled Trust?

A pooled trust is created by the person with special needs, a parent, grandparent, guardian, or a court. However, the trust is administered by a non-profit organization. The trust is funded by the disabled beneficiary’s assets. Each beneficiary has a separate account established, but for the purposes of investment and management of funds, the trust “pools” all these various accounts into one.  However, upon the death of the disabled beneficiary, if there are funds remaining in the account, the trust pays to the State of Maryland, an amount up to the total amount of Medical Assistance provided to the beneficiary.  The…

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What is the Medicaid Penalty Period?

The Deficit Reduction Act (DRA), signed by then President George Bush significantly changed the rules regarding transfers, for non-services, or gifts of assets (Gifts). Any Gifts made prior to enactment of the DRA on February 8, 2006, Maryland Medicaid officials review all documentation, bank statements, mutual funds, CD’s etc. for any Gifts made within the 36 months of the Medicaid application (or 60 months if the Gift was made to an irrevocable trust). However, for Gifts made after the enactment of the DRA the so-called "look back" period for all Gifts is 60 months. The “look back” period determines what…

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