| As your parents get older, they may decide that | | | | examine any gifts made within that five-year period |
| keeping the large house is too much work and they | | | | and then determine if a penalty should be assessed. |
| may desire a change of lifestyle. They may sell their | | | | What kind of penalty can be assessed? The penalty is |
| house and then they decide to give some of the net | | | | a number of months that Medicaid will not pay for the |
| proceeds to their children. As time goes on, if their | | | | long-term care that is necessary, such as nursing |
| health declines, they may need nursing home care. Can | | | | home care. If a gift was made of $18,000 about a |
| the gift that mom and dad made be spent or must it | | | | year prior to the date of application for Medicaid and |
| be held for a certain number of years? How does this | | | | assuming that nursing home care is about $6,000 per |
| gift impact mom and dad qualifying for Medicaid in the | | | | month, the penalty period would be a three-month |
| event that they need nursing home care? | | | | window in which Medicaid would not cover the nursing |
| The gift that you received from mom and dad can be | | | | home care. Under the old rules, the penalty began |
| used by you in any manner that you wish. However, if | | | | from the date that the gift was made. Under the new |
| your parents enter a nursing home, they could be left in | | | | rules, however, the penalty begins on the date of |
| a bind. This is due to the Deficit Reduction Act, which | | | | application for Medicaid assistance. This application |
| was enacted last February, which tightened the rules | | | | date may be at a time when your parents are already |
| for qualifying for Medicaid help with their long-term care | | | | in a nursing home and your parents do not have the |
| after making gifts to family members. | | | | funds to pay for the nursing home care. |
| The basic rules for applying for Medicaid to assist in | | | | One way to handle the penalty period is to have the |
| the payment of the bills for long term care are that an | | | | recipients of the gifts pay for the nursing home care |
| individual must typically use up all but $2,000 of their | | | | for the penalty period. While no one can force the kids |
| cash and investments. One way to accomplish this is | | | | to return the money by paying the amount of the |
| for the parents to make gifts to someone else, usually | | | | nursing home care, this may be the only way under |
| to their children. There were limitations on this practice | | | | current law to have a parent cared for in a nursing |
| in the past, which included a three-year "look-back" | | | | home setting. Alternatively, while waiting out the penalty |
| period, in which any gifts made within three years of | | | | period, the kids may have to care for mom and dad in |
| the date that the individual tries to qualify for Medicaid | | | | their own home. If your parents had thought ahead, |
| assistance may be used to determine if they have | | | | they may have purchased long term care insurance, |
| met the threshold. Under the past laws, a government | | | | which may help in offsetting the heavy cost of nursing |
| regulator could examine gifts made in the past three | | | | home care. |
| years and assess a penalty. (If a parent spends down | | | | In making later life decisions, it is always good to plan |
| the amount for their regular living or medical expenses, | | | | far ahead. Now, you just need to plan even further |
| the rules set forth in this article do not apply). | | | | ahead in making the decisions that will be right for you |
| Under the new rules, this "look-back" period has been | | | | and your family. |
| extended to five years. The regulators now can | | | | |