If making gifts is “divestment” for Medicaid, does that mean an elder cannot make any gifts five years before going into a nursing home? What about birthdays, holidays, weddings and graduations?

The problem is that the Michigan Medicaid rules of divestment say any “transfer of assets” for less than “fair market value” is considered divestment of assets. Once they find divestment Medicaid imposes a “penalty period.”  The rules make no exception for such gifts.

In practice the Michigan Department of Human Service does not require disclosure of birthday gifts etc. The reason is that ordinary and usual gifts of this sort are not done for the purpose of qualifying for Medicaid.  That does not mean that if dad is going into a nursing home he can give all children and grandchildren lavish gifts. That would be clear divestment.

But what of other gifts? What if grandmother bought a $1,000 savings bond when a granddaughter was born for her education and then gave it to her when she went to college?  What if two years later grandmother fell, broke her hip and went into the nursing home?  What if a son lost his job, so dad gave him money to pay his mortgage until he got a job again?  These sorts of cases may require a formal appeal hearing before the application would be approved.

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All the best,