Our Experienced Elder Law Attorney Explains the Impact of Giving Gifts on Your New York Medicaid Eligibility

Meeting Medicaid’s strict financial eligibility requirements can be challenging, so many people look for ways to “spend down” their assets to meet those requirements. Often, people try to reduce their overall asset amount by gifting certain assets to family members and friends. While gifting assets could help you meet Medicaid’s financial threshold, there are potential pitfalls if you use this strategy. How gifting affects your Medicaid eligibility

The dedicated and knowledgeable team at Alatsas Law Firm understands Medicaid rules in New York and knows how important it is for their clients to understand them, too. Our elder law lawyer, Theodore Alatsas, Esq., explains how gifting works and what to consider before you give away your assets.

Understanding New York Medicaid

New York’s Medicaid program helps cover medical costs for over 7.3 million low-income people in the Empire State. If a patient becomes incapacitated or disabled and needs long-term care in a nursing home, New York Medicaid offers Institutional Medicaid. If a patient lives in their home, the home of someone else, or an assisted living facility, Medicaid offers Community Medicaid.

To be eligible for either program, you must have limited financial resources, income, and assets that combined cannot exceed Medicaid’s financial limit. Any surplus must be “spent down” before Medicaid will provide support. An experienced Medicaid planning attorney can discuss if you meet the limit or how to do so.  

Medicaid May Penalize You for Gifting Assets

To reduce the total value of your estate to meet Medicaid’s financial requirements, you may consider various strategies for spending down your assets, including gifting property and possessions to other people. However, gifts must be carefully planned and done far enough in advance that they don’t cause problems for your Medicaid eligibility.

You may think that gifting a family member a piece of property or an expensive art or jewelry collection would be a good way to make your estate appear smaller and of less value. However, Medicaid knows that your family member could simply give these assets back to you at some point in the future. That’s why they have what is called a “look-back” period for determining the true value of your estate.

The Look-Back Period for Institutional Medicaid

During a “look-back” period, Medicaid looks at any gifts or asset transfers you’ve made during a certain period of time. If you are applying for New York Institutional Medicaid for long-term care, the look-back period is five years. Thus, Medicaid looks to see if you made transfers of property or possessions to help reduce your estate value. If Medicaid finds that you gifted assets during this time, it may result in a penalty period. For example, if in the last five years, you gave your granddaughter $10,000, Medicaid knows that your granddaughter could simply give that money back to you at some point in the future. So any money you give away, if you fund a trust, or if you do anything that reduces the value of your estate to be eligible for Medicaid, all of it will be counted as assets and may result in a penalty period.  

The Look-Back Period for Community-Based Medicaid

Currently, New York doesn’t have a look-back period for Community-Based Medicaid. However, there were plans to implement a 30-month look-back period in 2024 but have now been delayed until 2025. Even though there is no look-back for patients residing at home, with someone else, or in assisted living, it’s important to plan ahead for this change in New York’s Medicaid rules. There are many types of medical services that will likely be impacted.

The Penalty Period

If you gift assets to other people during the look-back period, Medicaid can impose a penalty period during which you’re not eligible for Medicaid benefits. The length of the penalty period is based on the total value of the assets you gifted. This can cause a lengthy delay before you qualify.

Disqualification

If Medicaid considers your gifting strategy “excessive,” it can lead to disqualification from Medicaid benefits entirely. This can leave you without crucial health care coverage when you need it most.

Our Elder Law Attorney Can Assist You With Medicaid Planning

An experienced elder law attorney can help you develop strategies to protect your assets and disburse them in ways that won’t interfere with Medicaid eligibility requirements. These strategies can take years to plan, prepare, and execute, so it’s important to meet with an elder law attorney long before you apply for Medicaid. We can work with you to create a comprehensive Medicaid plan tailored to your unique circumstances, history, assets, and family. We may be able to help you structure gift-giving strategies that can minimize their impact on Medicaid eligibility.

Talk to Our New York Elder Care Lawyer

While giving assets to friends and family may seem like a simple way to reduce the value of your estate, it’s important to consider the potential problems gifting could have on your Medicaid eligibility status. An experienced elder care lawyer can offer insightful and compassionate guidance and support throughout your journey to Medicaid eligibility, alleviating stress and uncertainty about your future. Consult with our experienced New York elder law attorney, who can provide invaluable guidance on developing a path to Medicaid eligibility.