How much money can Mom gift me without raising red flags with Medicaid?

what is not fair is that a person that is a good steward of their money and a veteran of WAR should be frown upon. Serving in the armed forces shouldn't have any reflection on how much you made or saved you put your self on the line and because you were wise with savings your not eligible. Why would anyone want to better them self.

I agree with you Diana, but that is not how it is now.

BTW This thread is 4 years old.

Guys we as the middle class Americans will always have to support everyone else in this country with our city, state and federal taxes. Shouldn't our parents who pay state taxes all their lives reap the benefits of a state funded Medicaid program the very same program they have been supporting financially speaking their whole lives? I think people tend to forget how many thousand and thousands of state income tax we middle class Americans spend out of our pocket every month through our paychecks. I think unless you are a millionaire Medicaid should pay for everyone's nursing home.

Regarding sirpsychosexy's question and Mr. Heiser's answer about cash withdrawals from a bank, I see a problem. Although I keep a very accurate record in my checking account of deposits and withdrawals, and I keep receipts for major purchases most of the time, I have to confess that many of my friends and relatives do not. Some people don't even balance their checkbooks! Some people write almost nothing in their checkbook registers, and cash withdrawals that are spent on this and that may simply not be supported by receipts. That kind of detailed record-keeping is beyond the scope of most of us. And elderly people who may be starting to "lose it" are probably less likely to keep good financial records. I mentioned before the frustration adult children feel when their parents spend foolishly or impulsively or fall for scams but because they are adults themselves the children can do nothing to prevent it. We are a free country and people are free to be foolish or to plan poorly. My concern about Medicaid applications is that an honest person who is NOT trying to gift himself money from his parents may be unable to back up expenditures with proper receipts, so what does the government do then? It sounds like the government will take a person's word for it, as is the case with an income tax return. So if your actions and intents are honest, you can proceed without fear (I'm assuming).

I think the best plan is for people to assume they will NOT receive an inheritance from their parents. Even if the elders have a goodly amount saved, and even if they have long-term care insurance, the costs are so high and the length of life is unknown and the result may be that all their resources are consumed paying for their care in a fragile old age. Most of our parents would be horrified to know what it costs to take care of them in a nursing home, and it is sad that the savings they built over years and years of effort cannot be left to family or to a beloved charity at their death. Modern medicine has cured the ailments that struck people down relatively young and now people are routinely living through their 80's and 90's. Sometimes they exist for years with dementia, unable to care for themselves in any way. It is incredibly sad and depressing to consider. I suppose that is one reason why people don't plan ahead for their own decline in old age. It is too scary to contemplate! When I talk to people about the subject they say things like "I'll kill myself before I end up like that" or "I'll work until I die" but these statements really are not practical. They seem to be the response of a person who has no good answer to the problem of a too-long life. Medical advances extending our lives are not always a blessing -- sometimes they can result in a person dwindling away slowly, year after year, suffering more and more losses and failures of health and body. I say sort of tongue-in-cheek but sort of not, that medical science should not worry about the ailments that cause us to drop dead or die in our sleep, but must attack with a vengeance the ailments that wear us down cruelly over time -- Alzheimer's disease, Parkinson's disease and the like.

Based on your statement that your Mom has considerable financial assets, it does not seem likely that she will qualify for Medcaid at the point she needs to go into a nursing home. Medicaid is set up for the finacially needy who have no other viable resources when that time comes. She will need to use her own assets to pay for nursing home care until she 'spends down' to the Medicaid guidelines for qualification. Sorry you caught flak for expressing your interest in Medicaid paying for her future nursing home costs, but that is exactly what you implied! Your best bet is to seek an elder care attorney that will be skilled in financial planning. He/she will help set up special funds set aside for her future health care (an investment that will grow), and if/when it runs out, then you will seek Medicaid. I am quite sure she will be able gift money to you, but by all means set things up right with elder estate planning. This will include protection of assets (I think it may be a Trust) to pay for her future care. If things are done right, she will have plenty to cover her care long before Medicaid needs to enter the picture (if ever), and you should be well protected for your inheritance as well. At the same time, (if not done already) you will arrange POA, Advance CareDirective, Will/Executorship. Please do all these things now, while your Mom is still mentally competent. Also see the Money & Legal tab on this website. It has a wealth of resources to answer many of your concerns.

none

sirpsychosexy....I think some people have misinterpreted your question totally! You are in a 'good' situation with your mother right now, but the two of you are just looking at what 'could be' down the road, and looking at what are the 'rules' for all the options that will come up for her, including Medicaid and trying to understand how all this works BEFORE it MIGHT be needed...is how I see it.
My advice is to hire an elder care attorney and get these questions answered. I am POA and Trustee for both of my parents. They are 91 and 87 and I had to take over about a year ago. My dad has dementia and since January has been in a memory care unit. They had investments, resources, a house, 2 vehicles and an RV...fortunately all in a specific kind of trust, whereby half of all assets are saved, reserved and 'hidden' from public knowledge for each spouse. When I say 'hidden'....I don't mean that anyone is cheating...just that, for example, my Dad has to only spend his half of all their resources, before being eligible for Medicaid or VA long term care benefits. We don't have to leave my mother penniless for the rest of her life, just to pay ALL their money for his care....but even with this trust, and even with a financial advisor from the law office, helping me to handle all this paperwork to be sure all we are doing IS legal and correct, this is a MAJOR time consuming part of my life right now! This is NOT fun. And the money goes quickly once you are into the long term care. We've spent over $30,000 of my parents investments on my Dad's care since January!! And that amount is JUST for the memory care issues...not covering ANY of the other medical costs, drugs etc that he has. Plus my mother's health care needs are becoming more expensive, and we are paying a caregiver about $2000/mo to help her be able to stay in their home by herself right now, because she fractured her back at Christmas time. I fully realize that, eventually, she will be placed somewhere too, unless she were to die first....and at that point their home and other non cash assets will have to be sold. There is also the possibility that her home will have to go into a Medicaid trust situation, IF she needs to apply for Medicaid. So, bottom line, there will be no family inheritance coming to me, other than a small life insurance policy where I am the beneficiary. However, they planned appropriately, got the right people to help them, and are legally trying to use their remaining resources to cover both of them. STILL, my Dad WILL be eligible for Medicaid while my mother still has some resources to cover her needs and all this has to be done a certain way to safeguard all this. With your mom being alone...you are on the other end of this situation...where I'll likely be next year...with only one parent to utilize all the remaining resources. It does sound as though your Mom may have more than 5 years left before she would need medicaid though, so you have some flexibility. But you really need to use some of her money to get the proper legal advice and set up things in the correct manner, so that if she wants to gift you, and IF she does own this income property etc, that the right decisions are made NOW to protect assets in a legal way...without hoping. But, just know that in the end, you still will be using up practically all her resources BEFORE Medicaid is approved. That's just the way it is, because in the end...yes....the Medicaid is for those who have only a limited amount of resources left. I wish you luck!

Yes, to be sure everyone knows the rules, one can avoid the impact of federal gift tax by limiting one's annual gifts to any one person to $14,000 (used to be $10,000). However, as a couple of folks mentioned above, this is not a Medicaid rule; Medicaid has no "de minimis" exceptions: They simply add up ALL gifts made within the five-year period before the individual applies for Medicaid and calculate a penalty for a certain number of months based on the total amount gifted.

The $10,000 'limit' has moved up a couple thousand, but it only means That a form 709 does not have to be filed,( it is tax free), but this is not in any way related to Medicaid EXCEPT it is subject to look back.

It applies to the IRS 'lifetime' total exemption

Then the last I knew the figures, it was $10,000 per year as a gift. Maybe she will be okay and not need a nursing home and maybe she will not. I don't think any of us WANT to be in a nursing home, but if you have no memory and cannot function, then you need 24/7 care. Since she does not have a memory deficit, this forum is for caregivers who have a loved one with dementia.

People often get confused between how much the IRS allows a parent or family member to gift with no tax implications and what amount creates a problem when a person may need to apply for Medicaid. The person above who said that Medicaid is for needy persons who are impoverished and not for people of means trying to divest themselves to get medical care for free basically is right on the money.
Another comment above refers to a person at 45 taking a high end cruise and ending up at 49 needing Medicaid. Again, right. Think of it this way though. You cannot predict something devastating and unforeseen often, much as you plan. Usually a person who is living a life including such things as a high end cruise would not even want to consider having a basic existence in a place that previously they might not wanted to have put their dog. I hate to put it in these terms, but, having a MIL in such a place, I will do anything possible to be prepared for old age and retirement. Medicaid is not a 'plan' but a last resort. (BTW, my MIL is in the place she's in not because she didn't save - she did. But it is in a very tiny town in a rather poor county in KS and not many options there. It was her hometown and her sister died there so she feels like she doesn't deserve any better. And she pays full price while she gets the same care that others get who are on Medicaid. Actually she hates it there, but now she is 93 and too frail to leave or move. We have tried to get her to live near us for years).
All gifts are considered in the look back period when granting Medicaid. If it appears - and it does - that money is given away to avoid spending it on one's care that is not ok. If your mom wants to gift you I guess one way to do it would be to put the money aside and invest it and wait and see if she does need Medicaid within the look back time from the date she gave it to you. If she does need it, then it can be used for her care. If you pass that period of time, you should be free and clear. And it would not appear that it was used to divert funds, be causes it wasn't!
Obviously, an attorney needs to be consulted about all of this. There are ways for her to spend down on home improvements, etc. that are kosher. If she then leaves you her property, the improvements made the home more valuable. And she has a nicer place to live in the mean time.

The penalty rules are designed to avoid precisely what you are trying to do. Your mom is blessed to have your support and company, she is also blessed to have savings and income producing propoerty. I assume your parents worked for that and paid their taxes, thereby contributing to society.

You are blessed to not have to go out of pocket to care for your parents, and if you are living rent free, you are doubly blessed. Helping mom is not something you should get a financial reward for. This is not something taxpayers need to support.

Medicare is for the elderly, Medicaid is for the poor. Moving assets to make her eligible is wrong, unethical and may not be legal. DO Not lie in any of the forms!

If I sound opinionated, this hits close to home. My father went through a long time illness, my mother and I paid out of pocket for everything he needed and he wanted. $4600 ramp, $2500 mattress (towards the end he was very uncomfortable in bed, and I was desperate to help him), months of live in help for my mom and dad, 24 hour nursing care in the last few months. When the end neared, dad wanted to leave the hospital, he was going into hospice but the doctor did not want to let him leave because it was obvious my 80 Year old mom could not care for him, and I did not live with them. The doctor was refusing to sign the release, he wanted to move him to the hospice unit, dad wanted to go home. I had to provide a written statement that I was paying out of pocket for his care, Hospice was only going to provide 24 x 7 care at the very end. Trust me end of life expenses can be very high.

The last 3 years of my dads life I spent a lot of time and money on him. I would not take back a penny nor a second. When I took his keys away I provided a weekly Sunday dinner and casino outing an something to look forward to. I took him on vacations. I visited him almost everyday, ran errands Saturday morning, personally changed him and stayed up many nights with him. All while carrying a heavy workload and not wanting to abandon a relationship with a great man.

Please rethink moving your mom's assets and remember they are for her care. Government provided care is a last resort and is never as good as privately paid care. Medicaid NH can be pretty nasty. Being able to live at home is more desirable for many and if your mom has assets, her quality of life is why they should be spent on. Do not work yourself to death as she needs more care, get help, so you can stay strong and remain kind towards her. While others can help you physically care for her only you can provide her mom-daughter moments of happiness, These will be truly priceless.


Bottom line, the taxpayers should not have to pay for the care of a person with assets, and your mom will have a better quality of life with private services than with Medicare provided services.

When your mother passes, you and the others he specifies can worry about the assets. You children will have a beautiful example if family support seeing how you cared for your mother.

Sorry if my words seem tough.

Bless You,
L

But Getting a bit off the original Question:
What I say is : "if you go to Las Vegas with Mom's Money, expect to lose, if you do, usually there are many more losers in your game"
So if you take,, you better be able to give it back. If there is/was $$ and it was 'taken' shame on you.

Planning should be done if for no other reason than to protect assets while living, provide a means of orderly distribution, including codicil to wills {items} ( saves a lot of family bickering, and theft accusing),

Those with 'some money' can spend a bit more up front, and save themselves and the taxpayers a burden later

Develop means to increase Estate values, and avoid creditor attachments.
Those who think they have 'considerable savings' may realize how inadequate that really is.... at $10,000 a month

Considerable savings might allow them to purchase a Rehab/STC Short term care policy, covering up to a year, at prices much much less ( less qualification) than LTC, and as such may serve the need especially for those who can't afford or qualify for a LTC policy, which is harder and increasingly costly every day.

Gabriel: yes. Thank you.

Other thoughts... people complain about people on Medicaid or welfare, and having to work harder to pay the taxes. But I can guarantee that there are numerous other areas in which the government spends millions or billions of tax dollars, which Medicaid would pale in comparison to.

We help third-world countries when there's a disaster. That's noble, but last time I was in Chicago, there are still Americans living in cardboard boxes on Lower Wacker Drive. We put our servicemembers in harm's way to "help" nations who don't even want our help. And yet, a couple of people who don't know me, and don't know my mom, want to bitch about her giving me $500 a month to invest for myself and my kids.

And that's $500 of HER money which she EARNED... didn't get from welfare nor any other type of handout.

Wow, it's always amazing how there will be an idiot or two in every cyber-crowd, thinking that they know someone and jumping to conclusions based upon a few paragraphs on a discussion board.

My mother is all about saving money and investing it, and WANTS to give a certain amount to me to invest for the future. She has worked her entire life to save it, and she's not about to check into a nursing home, but wants to do this for me with HER money.

Why is okay for Apple to shift billions of dollars (literally) of taxable income to other countries, to minimize their tax exposure (all perfectly legal), and then have their CEO indignantly stand up in Congress to declare proudly that Apple pays every dollar of taxes it owes, but it's not okay for a person to save their hard-earned assets and still qualify for Medicaid, by also availing themselves of Congressionally approved legal techniques?

I am confused. If your mother is in good health (dementia-wise), lives on her own (with help running errands, etc.), and has "considerable savings" why are you even considering Medicaid? Medicaid if for people who are truly without funds to pay for their care. Now, if you were to spend all her "considerable savings", then she might qualify for Medicaid, but as the attorney states, that five year period BEFORE is the catch. Just act like a loving daughter, and do all the things she did for you as a child, and stop worrying about the day which might never come. This nurse thinks you have some evil thoughts.

This question is an insult to society! You want to spend your Mom's money, and
then ask your tax paying neighbors to pick up the tab for her future care. People like you live in a dream world of easy entitlement. The government has no money. They only spend ours. So pay your own way, and forget cheating the rest of us!

Correction... "IF the children DON"T have pure intention.....

What all this discussion when you 'cut to the chase', amounts to is that for proper planning purposes: You MUST meet the 5 year look back stipulation according to DRA 2005. That is plain and simple, there is no "home brew' solution.
Why did they they come up with a 60 month look back? simply stated because people will not plan out, and they (gov't) know it!

Folks ask me: "well when is the proper time to start"? In the case of the under 50 person who ran into a catastrophic event , simply it was reasonably unexpected.
In terms of those who are over 65, and maybe in the seventies or more, that clock is beginning to tick. .... but when.???.. it is a guess we can't predict the future.
Key elements are the family dynamic; can parents trust the children? transfers must be irrevocable, BUT THAT PARTY MUST BE ABLE TO "REPAY THE GIFTING" if one does not get over the 60 month period, and Nursing/ home care is required.
It stands to reason also, that the intention must be to provide for the parent as needed, if that unexpected situation develops before the 60 month. and even after; such as placing the person in a private pay nursing home, and upon Medicaid eligibility SUPPLEMENTLING Medicaid care by paying additional (private room, extra attendant care, etc)
Keep in mind this NOT advice intended to be construed as "legal" counseling.
The fallacy of a quit claim deed (property) {bad idea},[that's a simple solution often contrived by a 'know it all', who is usually somewhat ignorant of the consequences], is evident when it is clear an asset was transferred at less than fair market value, or the recipient goes to sell the property and is then subject to FULL taxation, in contrast to an Irrevocable Grantor Trust.
Did the recipient sell the property before passing 60 months and a day? OMG!

There are many vehicles that satisfy the 'transfer' and retain 'devices to "repay the gift", again the family dynamic is of utmost importance, If the child or Children do have pure intentions , then the parents or giftor can be left in a precarious position and become ineligible.(for Medicaid).
It is additionally important that (money) asset transfers, and property as well be protected from attachment by creditors, & predators, opposing lawyers, Nursing home etc..
The use of proper trusts is one method, I have also used (and naysayers please check the facts before contributing misconceptions or inaccuracies) Single Premium Life Policies (certain ones), that increase the estate value immediately, provide some rehab/LTS benefits {based on the face value!}
and allow for return of the initial amount if needed, important!, (without penalty).
That is especially useful if it involves $$ the parent or owner of the funds intended to pass on upon death anyway.... A CD in the bank designed as POD (pay on Death) for 50,000 might yield slightly more, but not significant, than the original amount, & has NO protection from attachment, but the SPL, gains significant value immediately, and IS protected from predators, has LTC benefits, and is liquid.
It is also a great tool for charitable giving. As long as owners follow the rules
It can be owned by a trust or individual, In many instances saves the necessity /expense of a trust, based on individual situations.

As a caregiver a specific agreement must be drawn up as mentioned in an earlier answer, Payments made must be reported and care should be under the supervision in some way of a licensed (in the area of care), professional at regular intervals, and records kept of actual performance. Especially important if retaining the house is important (Medicaid Estate Recovery)

The Rockefellers did not retain all their wealth by 'owning' it all themselves.

Debralee - Filial laws...well that I doubt those can be done successfully. The Pennsylvania case was more about a daughter who refused to pay for care after signing a contract and filial was used by the NH to enforce the judgement.Most states don't have their law still based on old English which is what filial is. My state is actually French based and totally different on how it views heirship.

But MERP is required since the early 2000's for states to participate in Medicaid. Most states recovery rates are low to begin with as compared to how much the states spend on NH Medicaid. It is the whole having contracts let out by the states to companies to do MERP under the guise of being a state unit in which they get paid by performance or % of revenue collected that is the new wave imho.

My gut feeling is that for those states that do this, there will be the appearance of lots of recovery $$ back to the states from the proceeds of the home.For state that view intestate deaths property as being escheated to the state, there will be alot of $ back as it is costly for family to establish a lineal heirship and get all the legal done by ALL the possible heirs. Those states will get $$ via MERP. But once folks realize that having momma's house means that MERP will get it, then what they will do is just to let it fall to ruin and walk away as there is no benefit to maintaining the home unless you are very OCD on keeping records and doing everything in a quick time frame to file your exemptions. Which face it, isn't what most folks do. The market will be glutted with a ton of old lady homes, filled with decades of old people crap in them and years or decades of delayed maintenance. Most in older, declining neighborhoods. Bad for real estate market.

MERP was though of and written back in early 2000's when real estate was totally a go-go world and value did nothing but increase. Not so now or in the near future.

personally I think the exempt asset status on homes will be changed and the states will start requiring the home to be sold if there are no exemption)s) filed within the first year of their stay @ the NH. The smart $ will have homes owned by LLC's or other entities which cannot be touched ever if the property is worthwhile.

Thanks for your helpful answer, "Isn't Easy". I agree -- if Bill Gates' mother were indigent there is no reason he shouldn't help her out because he is totally able. On the other hand, I read in these blogs about adult children frustrated over their parents' imprudent spending, perhaps even resulting from an undiagnosed dementia, and they are unable legally to do anything about it. I think most adults already help their needy parents as they are able, but looking at today's young people I see that many are struggling in a bad economy, burdened with crushing student loan debt, earning stagnant wages (if they are so fortunate as to be employed) and facing a bleak old age themselves because defined benefit pensions are extinct and 401(k)s just don't provide what people need, given the many years folks live in a state of frail and extreme old age. Long-term care in a nursing home is so incredibly expensive ($70,000 to $100,000 per year) that no ordinary middle class person can afford it. I'd like to see another major government insurance program, similar to Social Security, that would provide long-term care for everyone. We'd all be required to pay into it and it would be there for us if we need it. It would certainly provide a great deal of peace of mind.

Filial Laws and Medicaid Estate Recovery Program will indeed become the wave of the future. American society has become an entitled entity of government handouts at taxpayers expense. Sooner or later the money is going to run out and medicaid will no longer cover NH's. Medicare is also in danger of not being sustained in the future. People need to start taking responsibility and use their assets for their care instead of saving it for an inheritence. When the money is gone then medicaid assistence is justified.

Sirp - Medicaid is needs-based and the state has the ability to require years and years of documentation to accompany the Medicaid application.

Isn't easy is spot-on about this.

Some state have contracted out compliance and MERP to outside firms. If your state has done that, then you will be stuck in paperwork hell and likely have a significant transfer penalty and perhaps even fraud issues and never get a MERP release on the property till it all is cleared. None of this should be taken lightly if you are planning to play games with reporting assets and income. And it is NOT just do the initial Medicaid application and then no worries. I have to do an annual re-certification on my mom's Medicaid application and there are specific ? regarding her home - like homestead exemption details, status on property, income producing, ownership change or future change (like a life estate done). All of this signed off on by me as her representative with a clear paragraph on fraud & penalty for nondisclosure, yet another MERP acknowledgement and then added this year another form specifically on the details on the status of her home. Oh and for even more fun, all due 13 days from the date on the letter. I always get it either the day after it's due or on the due date too. I know it's coming so I have the documents together and fax them asap. But my point is Medicaid compliance is constant and ongoing for the rest of their life on Medicaid.

You do realize that the income producing multi-unit property will always be an issue as the state can and will place a claim or a lein on the property as a part of the compliance required in order for her to get Medicaid? This isn't the state being mean but they have to do this in order to get federal funding for Medicaid. The claim or lein will show up if you ever go to sell the property too and can queer any sale. You have to disclose it also on the Realtor form as to the status on items on the property, just like you have to disclose if there was ever a flood claim or foundation issues you are aware of. If you don't and the buyer has to wait to close, they can sue you for the costs lost due to this or even worse get this and out of the deal and all their earnest $ back. You will have to get a release from MERP in order for the property to get a clear title in order for a warranty deed to be done.
Banks and mortgage companies require this before any money is lent too. There is no easy sure way to get around the Medicaid requirements nor should there be. If there was then everybody would spend every penny of Momma's $ on themselves and not her; put her in a NH on the state tit and within short time there would be no state support of NH for those who are at-need as the system would collapse.

First of all, as I understand it, these filial responsibility laws are not often enforced. When they are, there's usually a 'means testing' sort of provision in the laws that tries to limit responsibility only to children who can afford it. They do take into account that the adult child has others relying on them for support.
Let's say Bill Gates' mom is indigent and has to enter a nursing home. Should the taxpayers really pay for her care considering the wealth of her adult son. On the other hand, let's take an average American, me for example. If my dad made so many poor financial decisions that he finds himself at age $80, scraping by on $1,200 a month in social security and has no assets and I'm paying college tuition, mortgage, AND supporting him with a few hundred a month, should the state bankrupt me to pay his nursing home bill? What purpose would that serve? And, as you've all pointed out, parents can legally control their kids, kids can't legally control their parents, so why should they be financially responsible for them? If I'd somehow taken my dad's money from him in order to save him from himself, I could literally have been arrested for theft.

On what basis do those states believe adult children have an obligation to pay for their parents nursing home care? What if the adult children are struggling financially or have their own children to educate and care for? I would like to know more about the thinking behind these filial responsibility laws. Again, if adult children have no control over their parents' spending, how can they be asked to pay their parents' expenses?

Regarding so-called "filial responsibility" laws, i.e., forcing the kids to pay for a parent's nursing home bills if the parent is broke, here's a nice chart showing the various states that have filial responsibility laws:
http://tinyurl.com/8b89b9d

Clicking each state will bring up a description and citation of that state’s law.

I live in one of the states that has such a law. The law is rarely enforced, but there have been a couple of cases lately and, I predict, as baby boomers age and the numbers of those seeking Medicaid payment for skilled nursing increase dramatically, the state will go after families more and more unless those laws are taken off the books. When those laws were written, there was no way for a parent to consume $10,000+ in health care each month in their final years.