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How does a person pay his long-term care costs if he is in the "penalty" period because he gave assets away during the "look back" period?
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In most states, giving away an exempt asset (other than the home) does not cause a penalty when the person who made the gift applies for Medicaid within 5 years of the gift. On the other hand, if the t.v. is sold, that resultant cash certainly is a countable asset, even though the t.v. itself was an exempt asset.
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My Dad might be going in to a nursing home within the next few months. All this is happening fast.
He wants to have his money to spend when he's in the home so he can buy "what he wants when he wants", you know, to feel in control of his life. I know he can buy what he wants for himself (possessions, E.G. TV , radio, microwave, ..) in the 5 year window and it won't count against him. What happens if he buys a TV for himself and then gives it away in the following week? Does Medicaid check to make sure he still has the TV?
What would stop him from buying a high-end TV and then returning it the next day, taking the cash and then putting it away? Would this be a loophole?
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No, the cash value you received and then gifted would not have to be paid to the government, but it would result in a "penalty period," i.e., a certain number of months that Medicaid would not cover your nursing home bills. After that time period, assuming you otherwise qualify, Medicaid would start to pay your nursing home bills. The length of the penalty period depends on the total amount of gifts you made within the past 5 years (the "lookback period") and the state you are in, because each state calculates the penalty period slightly differently.
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If you had three seperate annunities and they were cashed and given to your children. Then you needed to be placed in a nursing home long term care, before the five year lookback was up,would the cash value of the annunities have to be paid back to the government before medicaid would begin to pick up your bills for long term care?
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My bad, it should read...."trust on behalf of your poodle, you can do so."
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Fieris - As a property owner, you can sell, transfer or do whatever with your assets as you see fit. No one is taking that ability away from you. If you want to put your assets in a trust on behalf of your poodle, you can do do. If the real estate comps for houses sold is 30% below the tax district assessed value and you sell your property at 30% below, that is a fair and legit property sale.

However, if within the near future, you should apply for Medicaid to pay for your needed NH or other Medicaid paid for service, then the state requires that those benefits go to those that meet both the financial and medical criteria for the program. Medicaid is a needs-based program for the very poor.

Because Medicaid is needs-based, doing a 5 yr look-back on the applicants assets is critical for the states to operate the program. If we were able to transfer all of our assets, empty out accounts, spend monthly retirement & SS on nonNH stuff today then go into a NH tomorrow paid 100% by the state, the system couldn't afford it & there would not be any NH to go to & be paid by Medicaid.

Medicaid compliance is all about either doing very advanced planning beyond 5 years; spending your share by paying almost all of your income to the NH; and spending down your assets wisely & legally to qualify for impoverishment.

Medicaid gets to the heart of the issue of who should pay for long-term care -- the public through the tax-supported Medicaid program, or users of long-term care through their personal resources, including those remaining after death.

If you choose to sell or transfer a property at a lesser value, without good cause, and then apply for Medicaid, you will face a transfer penalty period in which Medicaid will not pay until the transfer penalty is paid first.

If you don't want to spend down your assets to qualify for Medicaid for NH you don't have to but you have to private pay for the NH care. No one is making you apply for Medicaid and hopefully you have the long term fortune to private pay for all your care forever. It's my experience, that if you live long enough and are in a facility, that you will eventually run out of $ and sooner than you ever thought. And thank goodness that there is Medicare and Medicaid out there to pay.
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bj - there are lots of really good posting on this questions from the experts on this forum as well as family who have been through all this. It's great for you to get insight on this but imho you're real issue is that no matter what you think or what you know, your dad is not going to be accepting of facts that don't fit his viewpoint.
Is that what you're really up against?

If you are DPOA, then go to see an attorney to help sort out the options that can be done on your dad's behalf in your state. If you're not DPOA and he just won't do that, then eventually there will be an accident / emergency / medical condition that places him again in the hospital and the doc's will discharge him to a NH and he will be unable to leave and his assets will have to be used to private pay for his care and probably permanent stay there. His $$ saved will have to be used for this and at 5K to 10K a month for room & board at a NH, his $ will get used up in short order unless he is truly generationally wealthy. He will be fortunate in that by being private pay he can choose a facility and have the option of paying for individual services that Medicaid NH recipients do not. Good luck as none of this is easy.
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Maybe this is too simple a question: Why can't an elderly person, whose husband has been deceased for nearly twenty years, "sell" her home to anyone at whatever price she wants, and at any time prior to an affliction that may someday cause the need to be placed in a nursing home? If she only received ten dollars from the sale, how could the 5 year look back be applied? To qualify this even further, just because a municipality places a value on a home and property, that is no indication of the true market value of that property (just look at all the abandoned and rundown homes), so a property assessed at $200K is often times really worth far, far less due to its condition. It would not be placing the home in a trust to buffer it, it means selling it outright, but not receiving any real profit from it.
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Because she refused to pursue a return of the money, the state may decide that the checks were approved by her and therefore would be deemed a Medicaid gift. However, that is not a legal opinion, so you will need to check with your own state Medicaid department to find out for sure.
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What happens in the case of fraud? A relative of my mom wrote checks on her account and purchased other things online equal to about $10,000 in the last two years. This was reported to the Vulnerable Adult Division in our state and was investigated. But, because Mom refused to prosecute, there was nothing they could do. Will this now be counted as a "gift" in Medicaid's view?
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You are correct that purchasing things for yourself or your house is not considered a gift that can cause a penalty for Medicaid purposes. However, virtually all other gifts will indeed cause a penalty period; there is no de minimis rule for Medicaid purposes, so even small gifts can be counted if the person making the gift applies for Medicaid within 5 years.
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I live in NYS and my father has Parkinsons AND thinks he is going to live forever, OH AND he's 89! I have been battling with him for at least 11 years now, ever since my mother died of Alzheimers, that he needs to start gifting his money SO that the 5 year look back will not apply to him IF and when God forbid he needs to go into a nursing home and falls under medicaid! I'm trying to understand what his options are now. His health is failing and has been in the hospital 3 times in the past year and he is still arguing with me on this subject. He's very stubborn and just does NOT agree that "they" can take all his money that he has saved his whole life and eventually would want to leave to his family. SO I told him that he needs to at the very least use his money for "valid" things, such as home re[airs for family or paying scool debt, etc. Are these moneys allowed and not part of the "look back"? Also, I thought he was allowed to "git" a certain amount of money per year that is both not part of the "look bak" AND not part of medicaid, am I wrong?
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If you transfer the ownership of the policy, it will be deemed a gift/transfer of the value of the policy on that date, which is roughly the cash surrender value. If you then apply for Medicaid within 5 years, that gift will cause a penalty period.
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i have a whole life insurance policy that has a cash value of 24K, if i put my son as the owner, would this be considered in the five year look back in west virginia?
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Because she still is an owner of the bonds, the value of the bonds will be counted as her assets in determining if she has more than $2,000 (the maximum amount she is permitted to have and still qualify for Medicaid). Because she never gave the bonds to her children, she never made any gifts, so the five-year lookback period does not apply.
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My mom is in an assisted living place in Minnesota to help her with dealing with her Alzhiemer's. Six years ago, she took out I Savings Bonds (Federal) in her name with each of her children being listed on the bond to make it easier to distribute her estate later. The place where she is living will accept Medicare once she qualifies for that and have guaranteed us that she wouldn't have to move once she's done a private pay for 3 years. That time is almost up. Now, I don't know how the bonds that are in her name with the child's names would be counted. Does the 5 year look back count from when the bonds are purchased (6 years ago) or when the bonds are cashed (which they are still sitting in a safe deposit box)? She would be able to give these gifts to her children herself, if they would not have to count in the 5 year look back of assets. Any guidance would help!
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Hi: Yes, new editions come out each year. We are up to the 2012 edition, now! The exceptions to the transfer penalties are found in the chapter entitled "Transfer (Gift) Strategies" (on p. 175).
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I do have your book , 2008 edition.
Is there a newer edition ?
I could not find the chapter specific to this Special needs trust.
Appreciate your help & guidance.
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There is an exception to the transfer penalty rules for a transfer directly to a disabled child (of any age) or to an irrevocable trust for their benefit. I am glad you brought that up! These and other exceptions to the transfer rules are covered extensively in a chapter in my book, available at www.MedicaidSecrets.com. It really helps to be armed with the rules and exceptions. to help with your Medicaid planning!
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perhaps I've worded my question incorrectly.
I've been told that if I set up an irrevocable special needs trust for my adult disabled daughter, the 5 yr. look back will not apply.
Thank you.
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When a person applies for Medicaid for nursing home coverage, the form asks if you have made any gifts or transfers within the prior 5 years. That's considered the "5-year lookback period." If the answer is Yes, then you must list all items gifted during that period, and list the value of the item (if other than cash). Every gift made within the prior 5 years is then added up and the total amount is then divided by the average cost of a nursing home in your region (usually the entire state has one region, but some states have different geographic regions for these purposes). So, for example, if the total amount of gifts equal $50,000, and the average cost of a nursing home in your region is $5,000 (this number is determined by the state government), then there is a 10-month penalty period: $50,000 divided by $5,000 = 10 months. What that means is Medicaid will not cover you until that 10-month penalty period has passed. Note that the penalty period does not start until (i) you actually apply for Medicaid and (ii) you would have qualified for Medicaid benefits BUT FOR the gifts made during the prior 5-year period. Hope that helps!! I go into great detail with more examples in my book, "How to Protect Your Family's Assets from Devastating Nursing Home Costs: Medicaid Secrets".
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What is meant by " no 5 yr. look back " , is exempt when setting up a irrevocable trust for disabled adult daughter ?
Very confusing to most of us.
Thank you.
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The only way to avoid the imposition of a penalty when a person makes a gift within the 5 year period before applying for Medicaid is if the gift is returned promptly. Since the promise to pay your loans is not enforceable, such payment would be considered a gift, and therefore subject to the 5-year lookback period. If your father wrote a check to the bank that relieved your legal obligation, it would still be deemed a gift to you, since you would be the one benefiting from such check. In order to reverse the gift, you would not pay the state the money, you would have to pay your father the money. If he had already given it to the bank, that would cause a major problem, since you wouldn't have the money to give back to him! If I were you, I would explore other options at this point, such as a personal services contract. You may want to consider hiring an elder law attorney who specializes in Medicaid planning.
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Mom died four years ago, and Dad is in a NYS Nursing Home paying $440/day for a private room. My mother promised to pay my student loans (currently around $60,000 owed to Key Bank and consolidated). If my father wants to honor my mother's promise I know he could write a check made out directly to Key Bank paying off the debt. My question is will that money be considered a gift to me for Medicaid eligibility purposes? Would I be expected to pay it back to the State in order for Dad to avoid a penalty under the five-year look back rule?
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I recently paid an Elder law atty. $375. just for consult.
If I proceed to having a Special needs irrocable trust set up along with living will, POA , etc. the total cost will be $5,600.
I'm scared to death to go ahead with this as even though expained to me. it just seems much too complicated !
I am in process of selling my home & going into a over 55 residendial rental to make life easier for me.
I am 80 y.o.
The money aspect , spend dpwn is just so hard to understand.
What about my rental , utilities, normal expenses ? The cost of rental alone is $1300./mo.
We do need some easier to grasp info !
Thank you for this great informational "Aging Care " !
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The question isn't whether the income is counted. It's counted in ALL states--as income. Thus the owner of the real estate must include the net income as part of their countable income for Medicaid eligibility purposes.

What does vary from state to state is the treatment of the underlying real estate itself, whether it is a countable asset or not. Some states exclude it, some don't.

As for NY state, I'm not a NY attorney and cannot answer that question. Maybe a NY lawyer can post the answer here or you can do some further research on your own. Sorry about that.
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IS RENTAL INCOME COUNTED AS AN ASSET IN NY STATE? OR IS IT EXCLUDED....
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What about a streaming annuity to place my Mom's savings in? Can the nursing home then take that monthly in addition to her pensions/SS, and she then qualify for the balance to be paid for by medicaid?
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Some states exempt income-producing property such as rental real estate and will exclude it when calculating the assets of the individual applying for Medicaid. However, many states do not have that exemption. Once again, you need to find out the rule in your state before doing your planning!
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