Gifts and Qualifying for Medicaid for Nursing Home Care
Authored By: Legal Hotline for Older Iowans
Medicaid can help elderly or disabled Iowans pay nursing home and home health care expenses. To be eligible, your income and assets must be below certain amounts. If you give away money or property to anyone other than your spouse, you may not be eligible for Medicaid. In addition, the state can make a claim against the people who received the gifts.
Eligibility Penalty Period
If you give away assets less than five (5) years before applying for Medicaid, you may not be eligible right away. This is because the State of Iowa imposes a "penalty period" which starts when you are otherwise eligible for Medicaid.
Example 1: Assume you gave $80,000 to your daughter on May 1, 2008 and that you enter a nursing home and apply for Medicaid four (4) years later in May 2012. Since it has been less than five (5) years since you made the gift, you would have a penalty period. If the average cost of nursing home care in 2012 was $5,000 per month, your penalty period would be 16 months. (The penalty period is found by dividing the amount of the gift by the average cost of nursing home care at the time you apply for Medicaid. Thus, an 80,000 gift divided by the average cost of care of $5,000 would give you a 16-month penalty period.)
Example 2:Assume you gave $80,000 to your daughter on May 1, 2008, but that you do not apply for Medicaid until June 1, 2013. In this case, you would be eligible because you applied for Medicaid more than five (5) years after you gave the gift.
Claims Against People Who Receive a Gift
If you make a gift within five (5) years of applying for Medicaid for nursing home care, the State of Iowa can also make a claim against the donee. In the first example above, since you made the gift to your daughter less than five (5) years before applying for Medicaid, the State may have a claim against your daughter and can try to recover the cost of your nursing home care until they get back the amount of the gift.
Exceptions to Gift Rules
These Medicaid rules are not meant to prevent normal holiday and birthday gifts. They are to prevent people from making gifts just to get on Medicaid. These rules also do not prevent you from selling your assets for their fair market value, or from pre-paying burial expenses, buying exempt assets, or paying other living expenses.
There are also several important exceptions to these rules. For example, you can make gifts in any amount to your spouse or your disabled children. A parent can also transfer their home to a child who lives with and cares for the parent in that home for at least two (2) years if the care kept the parent out of a nursing home. There are many rules to qualify for Medicaid. Similar rules apply to the Elderly Waiver program.
The rules for qualifying for Medicaid are often complex and confusing. You may call the Legal Hotline for Older Iowans at 1-800-992-8161 if you have questions or would like more information about Medicaid eligibility.
If you have questions, contact the Legal Hotline for Older Iowans at 1-800-992-8161, 1111 Ninth St., Ste. 230, Des Moines, IA 50314. The Legal Hotline is a project of Iowa Legal Aid.
Last review 1/27/2012