I think I can safely say that everybody knows that an applicant for Medicaid Long Term Care benefits cannot give away assets to qualify. And I think I can safely say that everybody knows that the Medicaid “lookback” is five years. So, if making gifts is “divestment” of assets does that mean an elder cannot make any gifts to family, since they might need Medicaid benefits in the next five years? The short answer is “No.”
In practice the Michigan Department of Health & Human Service does not require disclosure of birthday gifts Christmas gifts etc. The reason is that ordinary and usual gifts of this sort are not done for the purpose of qualifying for Medicaid.
It all boils down to the question: What was the motive for the gift(s)? What if a son lost his job, so dad gave him money to pay his mortgage until he got a job again? What if two years later fell and broke his hip and had to go into the nursing home? The problem with these scenarios is that regardless of the facts surrounding these unusual gifts many Medicaid workers seem to think “if you’re old, you’re planning to go in a nursing home.” These sorts of cases may require a formal appeal hearing before the application would be approved. At the hearing the applicant would need to prove the “facts and circumstances” surrounding the gift. The fundamental question is “Was the intent of the gift to reduce assets to be eligible for Medicaid long term care benefits?”
Note that a gift cannot be disguised as a loan. There must be a legally enforceable agreement to pay back within the lifetime of the Medicaid recipient. And note there can be no delayed start to payback. It must start when the loan is made. If this is done Medicaid must accept the terms of the agreement.
A good Elder Law attorney can draft the loan agreement that Medicaid must accept. Then if you need to file for Medicaid, your attorney and you will have smooth sailiing to eligibilty for benefits.
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All the best,
Jim