How much can an elderly parent give as gifts without worrying about "look back" laws?

Actually, let me rephrase that . . . Her home is under a 'living will'. Thank you.

Can one gift $10K a year without a look back for Mass Health? My mother lives in her home but it is in a life estate.

I used to do that, too, with my parents' checks to me for holidays

Rosyday, what a great idea about tearing up the check after the fact. I will need to remember that in case my Dad remembers that he and my late Mom use to give me a check for my birthday and for Christmas. I have all of Dad's financials.

With elders living over 100 now a days, one never knows what will be the time line 5 years from now. So I need to be ready just in case with a lot of xerox copies of bills. For awhile I was needing to reimburse myself for caregiving bills that were pulled from my own checking account so those costs were a biggee.

I dont know if this will help. My mother always gave me and my husband a check for birthdays and Christmas (even though my husband is Jewish:)). She 91 in AL and I have POA. Since I pay her bills, i am concerned about look back when she eventually applies for Medicaid. I already will have to justify years of checks to a woman who cleaned for her. I now bring her a blank check for her to fill out and enclose in a greeting card. I then thank her, tear up the check at home and later tell her what i bought for that amount.

Assume the Medicaid will treat any check to a family member to be a gift subject to a look back period. There is no set amount by federal guidelines to my knowledge. It is probably best to avoid checks or large unusual withdraws. Christmas would be a red flag. Your local agency probably treats this as a carefully guarded secret. It can also vary by locality and caseworker.

well, igloo, up until fil passed away no taxes, no filing, since he was disabled, but, really, don't think it could be considered to be "working" anyway, since nobody's doing any of that, hence my concern re MERP.
But you're right; we're not the POA so, yes, also right, up to her, why talked to her; she's high up at a financial institution where she talked to their lawyer re - as I'm thinking she didn't really understand herself based on lawyer who did all that - the LE, thinking that all the children actually owned the property and could do with as will, especially since mil no longer lives there, not that was an actual stipulation, anyway, rather than it being than mil actually still owns it; she takes no responsibility, like as far as paying the taxes on it; she doesn't care since she doesn't live there and POA doesn't either, so if the children didn't go ahead and pay the taxes for their parts, everybody would just lose it all, which, again, mil probably wouldn't care and POA either, except for their part, which is a whole other issue, except that we've been given to understand - not from the POA - that all the money fil left her to take care of her is gone and if not "working" hence no MERP exemption then seems POA needs to be concerned, if no financial flexibility, unless she's planning on taking care of it herself? guess need to be finding out the rules here but nobody seems to want to, unless maybe as the ones who are having more to do with her and she with them, which doesn't seem to be us; her new hub came by our place over the weekend while she was out with them, including the poa; are finding out more as they do or are attempting to get more done; last time we talked mil didn't want to have anything to do with any of it; she didn't even want the le to be on the property; attorney just did it because had been done on the house part; said he wouldn't have any problem taking it off the rest if she'd just come in, but she doesn't want to bother with it, but maybe that's because of the money situation we didn't know about then and maybe poa knows as well

Deb - the "working" part, well my guess would be that each year you can show a tax filing on the business/farm; that the owners/partners participate in some sort of professional organization relevant to the farm (like Cattlemen's Association, AQHA, Bison Breeders of America or whatever for your farm/ranch); you know things to show that it is an ongoing true activity. Doesn't have to be profitable either.

If what I'm reading on your situation is correct, your not the POA, right? Well its going to be up to the POA to deal with all for her. It sounds like quite a sticky mess and its the POA's tar baby to deal with. You & hubs can go and visit and make her day brighter but don't have to deal with the minutia of legal and paperwork that's out there.

thanks, igloo, hm...wonder what has to be done to be considered working?...but I can understand, really, the states broadening the MERP re LE if they see it as just a try to be workaround of it; not really sure why it was done, other than actually the other way; he wanted to make sure mom was taken care of and had a place to live, though why then he didn't just make sure she just outright got it all, maybe, in his mind, it was also to make sure the kids did too; not sure he thought she could go ahead and sell or do something with it, though not sure she thinks so either, think do need to find about the tax breaks, though, since she also won't take any responsibility for paying them, not sure if she realizes or cares what would happen, especially since she doesn't even still live there anymore; think that did away with any tax breaks, especially since she went down there and told them; she actually remarried and believe her husband insisted she do so, not sure if felt wasn't right for her to continue to take it but not sure if he thought she would pay full price; actually nothing had had to have been being paid on it before at all because of dad's disability but not sure that would have applied to her or not; there wasn't really enough time to find all that out before she remarried. But we are wondering as well re the whole NH/Medicaid situation since - although we're not the POA and not sure how forthcoming she's been - she's not a child, which, from something I read on here, might be a good thing, at least in the sense of one child over another, maybe that's why she did it the way she did; she's a grandchild - with the other children regarding mom's finances- we've been told she's already given away all the money pop left her to take care of herself when the time came, so..re the land with LE, if would be subject to the MERP/lien, etc. re Medicaid; she does get dad's pension that he set up that way, even though she remarried; govt changed the rules regarding that some time back; otherwise somewhat wonder what she would have done; her sister got caught in that but don't know if it would cover cost but also wonder re new hub's responsibility; would he have any, igloo, do you know? the thought is seeming to be that he wouldn't but I'm not so sure; just because it's a 2nd marriage and they don't have any children/family together, wouldn't change that, would it?

Deb - my understanding of LE are that they change the ownership to show that upon the death of the owner the property passes outside of probate to whomever is named owner(s) BUT the old owner retains the ability to control the property during their lifetime. So they can continue to get senior citizen tax breaks, etc. as they still own the property but titled as a life estate. It's only once after they die that true ownership changes. So say parent has a son & a daughter on the LE, neither of them can go and get lending -like a heloc - on the property as they don't actually own it, it's still within the control of their parent as long as the parent is alive. Sometimes the LE is done so that if parent sells the LE property the named heirs must sign off also on the sale.

For those on Medicaid, since an LE in theory passes outside of probate, it was viewed as a way to get around medicaid's estate recovery (MERP). Merp was envisioned as done within the probate process. But states seem to now to take a wider view on recovery of assets even those outside of probate like an LE. PamS has posted about this happening in NYS. As an aside on this, NYS for things financial & legal often sets a standard for other states....so if NYS estate recovery is disallowing LE from bring outside of merp recovery then other states will likely do so also.

For those of us who are boomers, well it's going to be interesting what middle class retirees start to do to plan for future Medicaid.....if you've dealt with your parents Medicaid, home health, AL, NH sagas, you've seem up close that easily 100k, 200k, 300k is pffft gone within a pretty short time frame.

But back to your farm ?.....working farms & ranches can be exempt from medicaid estate recovery (MERP). Just like property the elder owns that is the site of a active family business can be exempt. But it's all on family & heirs to do whatever to deal with the paperwork for the exemption.

igloo, what if the property/farm has a life estate on it?

ritamae, a look back law consist of looking back 5 years at all the financials of a person who is applying for Medicaid. Medicaid wants to make sure the person is in dire need of this State run program that is paid by the taxpayers, and to make sure the applicant isn't hiding monies elsewhere or gifting monies to heirs... monies that could be used to help pay for that applicants care.

lnstein, real estate commissions are paid to the real estate company where a person hangs their real estate license, then it is up to the company to pay the licensed Realtor. Thus, I doubt Medicaid would accept a "commission" directly paid to a non-licensed person... it would not doubt be viewed as a "gift'.

I would check with an Elder Law Attorney to see what other way you could be "paid" that would be accepted to the 5 year Medicaid look back law.

what is the look back law

Instein - this is a pretty old thread that you've posted your ? on....you may get better answers by doing the ? as a spanking new ?.
But here's my thoughts on your situation...it sounds like the $ to be paid to you is NOT for a hard cost item paid (like you paid MILs utilities, cable, taxes) but instead for services rendered by you, is that it??
If so, IMO the $ paid by mil to you is likely to be viewed as gifting & subject to transfer penalty by Medicaid UNLESS the payment was made to you by MIL for professional services rendered to her as you /your biz would invoice to any other client OR mom & you have a memo of understanding or a promissory note done & notarized as to the "commission" and what it was paid for...eg, your an atty and review moms legal and she writes you a check for $1k which you deposit into your business account...or your an interior designer and stage the house prior to listing and mom pays you your standard rate for doing design work. And all is reported taxable income by you & your biz.

The issue with real property & Medicaid, is that the info is in the states database to the penny & date of sale. So a sale of 150k is known & mil expected to spend down 148k before medicaid eligibility. Also property must be sold at FMV which will be sticky as its gonna be tax assessor value PLUS her portion of farm income as per IRS. It's gonna be complicated & IMHO your "commission" is gonna kick up scrutiny of mils medicaid application past the local caseworker to whatever division deals with penalties & forensic reviews on applications. But whatever the case, must be FMV, so no special deal to family. If assessor value is whack, then family must get land & farm by a licensed & registered with the state appraiser to show a more accurate value.

BUT i have another thought for you.....You know working family farms & ranches have a special niche in the mice maze that is Medicaid. Most states have them as exempt assets for any estate recovery action (MERP). Even big 100+ sections type of ranches (like for TX where you need alot of acres per cattle) can be totally exempt from any eatate recovery. Mil might want to keep her portion and then your wife as her heir or as executor gets the merp exemption on it after she dies and then you all sell it and your bride gets the $ as heir. You, your wife and other family are gonna need to have a flexible wallet and be patient to do this approach but if it were me I'd look into if this coukd be feasible & get a NAELA atty to get an advance plan thought through before mil ever applies for Medicaid.

Btw Most family or in laws do stuff out of a sense familial duty & for free.

Money given as a commission for selling property. My mother in law is about to sell her portion of her farm to a family member. I am her son In law and gave been instrumental in the selling of the property. She wants to give me a commission for selling the property, which has been well documented at the attorneys. This is not a gift. If she needs to go into a care center, will this commission be looked upon as a gift or my fee for helping to sell the property. There is no real estate agent involved

they don't miss a beat, do they? guess you're saying if they have a home, you're talking about utilities, etc. spending and mortgage, if have one; in this case, they don't. In this case, it is still a couple, which I do know does make it different, at least if one goes in nursing home; other one can have a lot more than if there's just one - do tend to forget about that, because guess more thinking in terms of just the Medicaid to have help in the home but seems to be different, was first thinking I was thinking wrong but think I did call the Medicaid office re that and was told that even though it's not quite the same; think they allow 3x that limit; that's still nothing like what they allow community spouse of nursing home patient, which not sure now I understand, because it would cost more for them both to stay home than for just one; anyway under those guidelines, the single Medicaid limit + even the 3x that they still have more than that - in re some of the spend suggestions I've tried to get them to prepay their funeral expenses and they have just steadfastly refused to do so; there've been some issues around with that so they want to just hang on their money for that purpose even if it's affecting them now; the real issue has been not only the money they've taken out of their savings which, yes, was gifted, just no paper trail but can't really blame Medicaid for discounting it anyway unless they could show otherwise where it went, which in their case didn't so....but also cutting into their income for the repayment of their debt they also went into for the same thing, which I've also tried to get them to at least consider just quitting repaying even if that could lead to taxation issues, which I think somewhat gets into the issues others have raised; I don't think it would be nearly so much as what they're paying now or that that's really the issue so much as just the moral aspects of paying their debt but if it's going to cause other issues but guess no danger of going on Medicaid because don't think they'll let them; not sure what's going to happen

Deb - What I've been told is medicaid review does / utilizes a "pattern of spending" review. Is an algorithm that their awards letters $ info along with living situation and financial details is entered to provide a range of what assets they should still have for individuals applying for medicaid.When a widow or widower apply for medicaid there are all sorts of info required - so say mom gets 1K a mo income, lives with a daughter, has no personal care contract agreement with daughter (so no $ paid to daughter); mom had 50K in savings 5 years ago when dad died. Now mom applies for medicaid as she needs a N.h & is down to 2K in assets....so just where did 108K (50K savings & 60K of income) go to? Yeah some was spent on regular living costs but not 108K. Yeah there could be medical costs but most covered by medicare.....so where did $ go to? If their in IL or AL there's an obvious trail of spending that could have used up 2-4K a mo; if they have a home, there's an obvious trail of spending. But otherwise probably gifting to family & so disqualifying transfers going on to have them get to 2K without a spend down.

I'm wondering if the money was not transferred by check - how would it be tracked then?

KatJohnson, I think you are referring to at what point gifts become taxable. This thread is about MEDICAID eligibility. Very different rules!

$14,000. to each of his five children can he do that with the five year reimbursment,law for long term care this would =70,000.

Janice & ODIL - Medicaid NH rules set by each state & are state specific even though is a joint federal & state program. Qualification is NEEDS-BASED for both financial & medical necessity. You are fully expected to spend down your assets first & foremost before the state will pay. The state has the ability to do a 5 year lookback on finances and can impose a transfer penalty for $ gifted. There are things that can be done with assets in advance but imho need to be done by someone qualified who understands your state’s Medicaid. Usually a certified elder law attorney.

For NH Medicaid eligibility, an individual must show that:
1) are 65+ (can be younger if qualified disability),
2) medical condition requires skilled level of nursing care,
3) monthly income at or below their states max (varies, about 2K),
This is the “income test”– how much $ do you make.
4) all countable assets (or resources) are at or below 2K (higher if community spouse). This is the “asset test” – how much $ do you own.
Assets are savings, IRA, stocks, insurance, real estate, etc.
5) have not gifted away anything of value during 5yr look-back.

If you do, could be a “transfer penalty” for gifting. Transfer Penalty based on each state’s NH daily reimbursement rate. For Texas $ 142.92 (2011 rate). So a gifting or transfer of a Blue Book value car of 10K = 70 days penalty in which you have to private pay NH although they are accepted in Medicaid if in TX. The transfer penalty is sticky to deal with as it usually comes up after they are in the NH and the state in it's required due diligence finds the transfer and you and the NH get the transfer penalty letter & have to quickly figure out wtf to do and come up with the $ and the NH will be pressing you to figure out what also otherwise you could face the dreaded "30 day notice" (which really is like 90 days) but puts family in a total panic situation and awful situation for the parent as they can feel the problem. The transfer penalty has a specific equation in how it's done in each state.

Financial look-back is up to 5 yrs. Most states require 3 – 6 mo. of all financials, plus property ownership documents with the initial application. For car or home, that usually is current tax assessor’s statement. You sign off for state’s ability to access any & all records. State can require add’l documentation if something pique’s interest, like paperwork to establish if insurance is term or whole life.

My mom's Medicaid application was over 100 pages, mainly due to her very old-school life insurance as you are asked to provide every page of the policy and it was like 15 legal size pages = 30 pages. Even then there was a glitch on it as the old policies don't scream "this is a term policy" on the face page but you have to read it. So I had to get a broker who holds a TX insurance license (I don't live in TX) to do a letter stating that and faxed it over to caseworker. That problem solved
Also I had to do a letter from my mom's bank as to the disposition of all accounts for 3 years prior. She had CD's and multiple accounts and when she went into IL
I started to close them out and into a single account. Like when a CD expired, it didn't get renewed but transferred into the main account. This was in the long run a most fortunate move as having that letter on bank letterhead signed by a bank officer and notarized clearly established her path to impoverishment. My mom is mid90's and really if they live long enough, they will run out of $ and will qualify for Medicaid unless they are generationally wealthy imho.

The transfer penalty if it gets sticky will need an elder care attorney to deal with and work out for you. Tangible property like cars and houses are recorded by the state and any transfer of them will be found out eventually. Bank accounts perhaps not so but do you want to live with that possibility looming out there? With the states facing enormous shortfalls of income, pressing the transfer penalty on family is an simple way to get NH costs paid privately. The only items I've heard of that are under the radar for Medicaid review are oil & gas & mineral revenues and that is probably due to how they get recorded so unless you are Abagail Aardvark
your name is not going to come to the surface for partial ownership on that gas line and the payout is often held till it reaches a set amount which could take a few years to build to that.

Janice - yes I agree with you that many continue to have their elder live with them because they cannot pay the transfer penalty. And there are those that really have become interdependent on the elder's SS or other retirement income for them to stay afloat financially. It is a tragic and stressful situation to be in for all.

JaniceC,

I am not from Ohio, hopefully someone who knows more will also reply. I have read various Medicaid scenarios and the only thing I have seen that will help with a penalty period problem (other than returning the money) is having the senior live with the people who received the gifts.

My MIL is in a nursing home now. She was expected to improve and be out in 100 days, They now tell us that she will be staying. Our problem (after reading these articles) is that at Christmas she gave each of her boys $5000.00,($25K) . She still has $35K so she is not out of money yet but......at $5,700. a month for her expenses,She will be out of money in 6 1/2 months. The sons have spent money on various things. None of them have any extra to even pay it back if they have to. What do we do now or if the ocassion arises that she runs out of money and needs to go on Medicaid? We were not aware of the gifting problem. Knew that she could gift as much as $12500. to each person but.. now I read this and am really worried that we will have to try to find enough money to pay her expenses . When can we apply for Medicaid??????..It was not done intentionally and and scared to death that she should not have given them gifts. We live in Ohio. What are our options??? Feel terrible about it but was just not aware that you cannot give a gift to soemone .

Thank-you for your answers. However, in the NH my mom is in the difference in the cost of a private room and "semi" private room is $10 per day, or approximately $3,520 per year--when the cost of a NH is well over $60,000 a year. it does not seem right that a resident has to give up so much for so little. I think the newer NH are going to private rooms. The one my mom is in is over 35 yrs old and has 10 private rooms but many more "semi" private. And, again--to say that no one is forcing them to go to a NH is rather seems rather harsh. Just what do you suggest they do when they are to infirm to take care of themselves and family is unable to care for them????? It seems simple to say "no one is forcing them to go" but please give me some reasonable alternatives. I know it is not fesible to remodel old rooms into private room--like shuting the gate after the cows are out. But I think private rooms, like the HIPPA laws, need to be inacted to see that everyone has a "right to personal privacy--and there is no privacy in a "semi" (note the word "semi" ) private room--when one can heard every bodily function of their roomate, over hear conversations, have to complie with others preferances, light on--light off among a thousand other little dauily things you don't even think about until you don't have the complete freedom to choose. Personaly I am more concerned about sharing a room than I am about having someone know what my physical condidation is or what medications I'm on. Who cares, once you go into a NH? It is pretty obvious that you have some sort of physical alments or yyou wouldn't be there in the first place. I think if they spent less time doing reems of paper work and busy work on the HEPPA (or whatever it is called) laws they would have more money to make make better living arrangements for our seniors. I know some of what you said is valid. but I've visited with staff at my mom's care center about the need for private rooms and they agree that private rooms would make their jobs easier as they wouldn't have to spend time setteling differnces between roomates or figuring out who would work best with who. Think about it--how would lyou like to have someone move into your bedroom and put only a curtain between your beds. Would that give you enough privacy? Why would persons in NH feel any differntly??? They once lived like you are now you know--

Igloo, I appreciate your kind words of wisdom, based on your personal experience and your extensive research. And I espcially appreciate you taking the time to share, again and again and again. I love your statement that "there is only so much Hilton Hotel that can be done on a Comfort Inn rate." Perfect!

Two of my aunts were in the same small-town care center, built maybe 25 years ago, and kept up very nicely. They each had private rooms. One was definitely on Medicaid, and I am not certain about the other. They both had private rooms for the very simple reason that every room in the center was private. So, sometimes you luck out. :)

flustered - In order to participate in most federal or state subsidized programs, there will be some sort of compliance required. Like immunizations for school, or passport for travel. For NH Medicaid, the program requires a shared room unless there are circumstances that keep that from happening. The curtain in the room provides for a reasonable amount of privacy, just as it does in a hospital room. Most hospitalization insurance requires a shared room, again unless there are circumstances that keep that from happening. So short of giving your elder a highly communicable disease (that would require them to be in isolation), you need to look for a NH that has single room options. Usually these are very, very old NH that have not been renovated or have a room too small for sharing. My MIL was in a NH in which her room was more like a small hotel room that shared the bathroom (we thought the place was great, she hated it); it was a very old facility in a historic zone so no changes allowed to it's existing footprint. About 2 dz of the rooms were like this and totally OK for Medicaid. At my mom's current NH, there are 4 rooms at the end of the hallways that are too small for 2 beds, so are solo residents (they abut the wide fire escape stairwell). These too are OK for Medicaid. I have no idea how the residents for them are chosen but I know that 1 of them has a younger community spouse, so that is probably a factor. I know my mom's NH has a long waiting list in general, so I bet those rooms do too. You can move them from 1 room to another too, you have to work with staff to make this happen. My mom now has the window bed on the 2nd floor that overlooks the courtyard, so the view is fab BUT it's next to the shower room so it's noisy. You have to do the research to find the right NH and then make it work for them.

HIPPA regulations are about the federally required privacy of data and personal information and not sharing a room privacy.

I'd suggest a word of caution about complaining as there is only so much the NH can do. Between my mom, MIL and aunts, I've dealt with 6 facilities in 2 states (and looked at a dz+ more), the amount of $ the NH is given for Medicaid reinbursement is pitifully low. TX is $ 143.00 a day, so there is only so much Hilton Hotel that can be done on a Comfort Inn rate. The current system is not perfect, but every day I am grateful that Medicare and Medicaid exist. The program is facing huge costs and there is no way the system can afford private rooms. Again, unless they are a ward of the state, no one is forcing them to apply for Medicaid or move to a NH. But if you do, you & the NH have to be in compliance.

BTW not wealthy.

Sorry, your answer does not help! If a person must go on Medicaid then they are "forced" to share a room. What alternative would you suggest--that they sit in the street when no other option is available to them. Sure--the ones who can afford it can have privacy--but the ones who run out of money--and many people will before they run out of time, must then share a room as, without enough money to pay for "privacy" they are "forced" into "semi-privacy" and no matter what the "law" says, sharing a room is an invasion of privacy in the highest form. You try it awhile--give up everything you have and move into half a room with a stranger who knows every time you go to the bathroom, barf, etc. That is not privacy no matter what the law says--the laws are screwy and only enough complaints can help change them I've been writing my congressmen and talking to everyone--and--strangely enough, nearly 100% of the persons agree that sharing a room is an invasion of privacy and think that living in half a room would be miserable--not living--existing. Just what do you suggest for someone who doesn't have enough money to pay for a private room do?? Apparently not everyone is a rich as you apparently are. I agree--they aren't being bodily dragged into a nursing home--but for many there are no other options but to go into a care center--and share a room. It's disgusting that the elderly must do this.

flustered - no one is forcing your family member to have a shared room or semi-private room; just as no one is forcing them to go into a NH; or be in a NH and on the Medicaid program. They or family members can private pay for a single room or suite of rooms at the NH. There are many, many NH who do this. But it will be very expensive and private pay. If they want to utilize Medicaid or Medicare or most LTC insurance or other insurance, it needs to be a semi-private room in order for compliance in Medicaid, Medicare or insurance. Regarding right to privacy, if you are referring to HIPPA regulations, that has to do with access to (the privacy of) personal health care information & status/data and not whether or not you share a room in a NH.

With all the right to privcy laws there are how can persons in nursing homes be fored to share "semi-private rooms"? To me this is an invastion of privacy in the highest form.