Gifting assets to family members may seem like a smart way to protect wealth, but it can impact eligibility for Medicaid coverage.
Medicaid has strict rules to ensure applicants meet financial requirements, and improper transfers can result in penalties or disqualification.
Medicaid’s look-back period
Georgia follows the federal Medicaid guidelines, which include a five-year look-back period. This means Medicaid reviews any transfers or gifts made within five years before the application date. If assets were given away or sold for less than fair market value during this period, it could trigger a penalty. The penalty period delays Medicaid eligibility, leaving applicants responsible for their care costs.
How the penalty period works
The penalty period is determined by the total value of the gifted assets divided by Georgia’s average monthly cost of nursing home care. For example, gifting $60,000 to a family member when the average monthly cost is $6,000 would result in a 10-month penalty. During this time, Medicaid will not cover long-term care services, and the applicant must find another way to pay.
Exceptions to the gifting rule
Some transfers are exempt from penalties under Georgia law. Gifting assets to a spouse, a child under 21, or a disabled child does not affect Medicaid eligibility. Transfers to a trust for the sole benefit of a disabled individual or certain caregiver situations may also qualify for exemptions.
Planning for Medicaid eligibility
Proper planning is essential when considering asset transfers. Medicaid’s strict gifting rules aim to prevent individuals from reducing their assets to qualify for assistance. Understanding the look-back period helps families make informed decisions about protecting their financial future while ensuring Medicaid eligibility when needed.