What Are Medicaid Gifting Rules?

As many of you know, Medicaid is a government program that covers long-term care if you’re not able to pay for it yourself. However, to be eligible for Medicaid, you must have limited means.

Lookback Periods Have Increased

In Florida, being eligible for Medicaid benefits to pay for long-term nursing home care has become stricter, and the lookback period has increased from three years to five years.  This means that if you go into a nursing home and then apply for Medicaid, any gifts you made will be added up by Medicaid and a formula will be used to determine your penalty period.  During the penalty period, you will not be able to receive Medicaid benefits and you will have to pay your nursing home expenses out-of-pocket. 

At Doane & Doane, PA, we are passionate about giving our clients the personalized legal counsel they need to appropriately take care of many major life and death decisions, whether it is estate planning or understanding the Medicaid gifting rules.

So, to answer your estate planning and Medicaid gifting questions, we welcome you to consider contacting us at Doane & Doane, PA for estate planning advice and services.  You can contact us today at 561-656-0200 or fill out our online contact form . 

Under the Florida Medicaid Program Manual, assets are defined as “items of value that are owned (singly or jointly) by an individual who has access to the cash value upon disposition.”

This definition does include liquid assets which include cash, or assets that can be payable in cash on demand. This also includes non-liquid assets that cannot be easily converted to cash. 

The asset limit in Florida for a Medicaid recipient is generally $2,000 or $3,000 per couple. In some cases, it can be as high as $5,000 or $6,000 for couples. 

Medicaid considers that any transfer you made during the lookback period was for the sole purpose of being able to apply for Medicaid. 

While many of these transfers could cause you to suffer a penalty, there are specific transfers that are exempt from any penalty. They include:

1. A transfer to your spouse
2. A trust for the benefit of a child who is permanently disabled or blind
3. A trust for anyone under the age of 65 who is considered to be permanently disabled. 

Under the Medicaid gifting rules, there are exceptions that may apply if you transfer your home.  You may transfer your home to:

1. A child under the age of 21
2. A child who is disabled or blind
3. A sibling of yours that has resided in the home during the year that preceded your entrance into a nursing home, or who already has an equity interest in your home.
4. A “caretaker child.”  A caretaker child under Medicaid rules is a child who lived in your home for at least 2 years before you entered a nursing home and who provided you with the care you needed that allowed you to avoid going into a nursing home. 

There is a solution available to you that can let you be generous without putting your future Medicaid eligibility in jeopardy – A Medicaid Gifting Trust.

Without breaking any Medicaid gifting rules, you can put assets into a Medicaid gifting trust, and still make gifts to your family.  

Once the Medicaid gifting trust is created and properly funded, the five-year lookback period clock starts.

Here’s how the trust works: let’s say in July of 2020 you created a Medicaid gifting trust and funded it with $100,000.  

Then in December of 2020, you gifted one of your children $25,000 for a costly repair to his home. Then in 2022 you gift one of your grandchildren money from the trust for college tuition.  You continue to make gifts using the money in the trust. 

Then in July of 2025, you need to enter a nursing home.  When you apply for Florida Medicaid benefits, none of the gifts you have made over the last 5 years, nor any funds still in the trust are considered by Medicaid because five years have passed since you established the trust. 

If you’re like many Floridians, you like to plan ahead and be prepared. By using the Medicaid gifting rules to your advantage, you can avoid a Medicaid penalty period. 

Founded in 2003 by husband and wife legal team, Randell C. Doane and Rebecca G. Doane, Doane & Doane provides legal and financial services to families, individuals, and businesses throughout Southeast Florida.

Estate planning and Medicaid gifting rules include much more than just giving away property.  It is an act of love and kindness, with the ultimate goal of providing for the future financial security of your loved one.  At Doane & Doane, our Wills and Trusts Attorneys West Palm Beach help people plan for retirement, make provisions for loved ones, figure out future child support, and minimize tax liability.  Experienced wills and trusts attorneys know which tools to use to get the best results for their clients.  Our lawyers can help you determine which tools are best suited to your specific circumstances.

When it comes to probate matters, such as the formal administration of an estate, and Medicaid gifting rules planning, Florida fiduciaries seek the assistance of the attorneys at Doane & Doane, P.A. to administer and manage their trusts and estates.  Notably, the founding partners of Doane & Doane are board certified West Palm Beach Probate Attorneys.  With the additional advantage of certified public accountancy in their backgrounds, they present a unique combination of skills and experience which enables them to effectively settle, administer, and manage clients’ trusts and estates.

Call us at Doane & Doane, P.A., to help you if you are faced with a probate matter, or if you would like estate planning services in Florida.  You can reach us at 561-656-0200.  Call us today.

The information in this blog post is provided for informational purposes only and is not intended to be legal advice. You should not decide whether or not to contact an attorney based upon the information in this blog post. No attorney-client relationship is formed, nor should any such relationship be implied. If you require legal advice, please consult with an attorney licensed to practice in your jurisdiction.