Let’s Talk About Medicaid Penalties and Gifts
The issue of gifts and penalties for Connecticut Title 19 Medicaid keeps coming up on a regular basis in recent meetings so I thought I would take a moment to specifically answer some of the common issues.
First - any transfer of any asset within five years of applying for Connecticut Title 19 Medicaid benefits creates a penalty period of ineligibility. There are a few very narrow exceptions of transfers that do not create a penalty, however the burden is on you to establish by the evidence that you qualify within one of the exceptions. Now let’s go over some basics.
You will notice all types of transfers are included in the rule. Be it writing a check payable to someone, handing them cash, signing a deed over to someone etc. As it says, any and every transfer is included in the scope of the rule. A simple way to look at it is if the person gives away an interest and access to property, you are at risk for your transaction being labeled a penalizing transfer and resulting in a period of ineligibility for Connecticut Title 19 Medicaid benefits.
One popular transaction that comes up often is taking a joint account and removing the Medicaid applicant’s name from the account. This is a gift. The Medicaid applicant had unrestricted access to the full value of the account on one day and after his or her name was removed from the account they no longer had access to the account. This transaction results in a period of ineligibility.
Another popular question concerns Medicaid penalties and annual exclusion gifts. For tax purposes, each person is allowed to gift a certain value to any person tax free. That is where the annual exclusion gifts end, for tax purposes only. In the context of a Connecticut Title 19 Medicaid application, a gift that you made which is tax-free can very well be (and almost always is) a gift subject to penalties for Medicaid eligibility purposes.
Another example are special occasion gifts such as birthdays and graduations etc. There is no exclusion for these types of transfers no matter how noble or small they may be. Any and every gift is subject to the penalty period of ineligibility rules whether it is $5,000 or $500. And if you are considering a strategy of stonewalling the Department of Social Services by denying information think again. You bear the burden of proving your eligibility. If the law presumes a transfer is a penalty and you do not prove otherwise you will be denied benefits.
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Index Tags: asset protection, estate planning, medicaid eligibility, title 19 medicaid
