Gifting and Transferring Assets to Qualify for Medicaid
What Florida seniors are allowed to do with their assetsBy Doug Mentes, Esq. | Last updated on January 19, 2023
Use these links to jump to different sections:
- Assets and the Look-Back Period
- Can I Sell or Gift an Asset Within the Look-Back Period?
- Period of Ineligibility
Assets and the Look-Back PeriodThe look-back period, or penalty period, is the time during which gifts or sales of assets will be evaluated to determine any exemptions. The period is limited to the five years prior to the month during which Medicaid was applied for. Assets are defined by the Florida Medicaid Program Manual as items of value that are owned (single or jointly) by a Medicaid applicant who has access to the cash value upon disposition. Assets include liquid assets—which are cash assets, or assets that are payable in cash on demand—and non-liquid assets, which are countable assets that cannot be readily converted to cash. The asset limit for a Florida Medicaid recipient is typically $2,000 ($3,000 for a couple), but, in some cases, it’s $5,000 ($6,000 for a couple).
Can I Sell or Gift an Asset Within the Look-Back Period?For gifts, typically, the answer is no: You cannot gift an asset during the look-back period for Medicaid. It’s considered a gift, or “transfer of assets,” when the applicant or their spouse does not receive fair compensation in return for the asset. Under the Medicaid rules, the transfer within the look-back period is presumed to be made for the purposes of Medicaid planning. However, in some cases, an applicant can gift or sell an asset within the look-back period and not suffer a period of ineligibility under Medicaid transfer rules. The applicant is required to demonstrate one of the following reasons to overcome the presumption:
- The individual intended to dispose of the assets either at fair market value (FMV) or in exchange for other valuable compensation—for example, support and/or maintenance.
- The asset was transferred solely for reasons other than to become eligible for Medicaid.
- The transfer was considered to or for an allowable annuity.
- The transfer was toward allowable homestead expenses.
- The transfer was between spouses.
- All assets transferred for less than fair market value have been returned.
- Imposing the transfer penalty on the individual would place an undue hardship on the individual.
Period of IneligibilityApplicants who make an improper gift or sale are subject to a period of Medicaid ineligibility. During this time, Medicaid will generally not cover costs. The period will depend on:
- The amount of uncompensated value from the transfer
- When the transfer occurred
- The average private nursing home and long-term care costs
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