I’ve written numerous posts about Medicaid gifting and the misconceptions surrounding the annual gift tax exclusion rules. Generally, I’m asked the question whether New Jersey Medicaid looks at the gifts a person gives to his/her kids if the gift is valued under $15,000 each year. It’s the person’s understanding these gifts won’t have an impact on their qualifying for Medicaid benefits if they ever need a nursing home.
Beware! These folks are incorrect. They are confusing the Medicaid gifting rules and the annual exclusion for federal gift tax purposes. Let me explain.
The $15,000 referred to above is the annual federal estate tax/gift tax exclusion. That’s the amount that you may give away each year, to as many individuals as you wish, without diminishing the amount the federal government allows you to give away during your lifetime without any gift or estate tax consequences. Currently, the lifetime unified estate tax/gift tax exemption is over $11,000,000 per person.
The Medicaid eligibility issue is unrelated. When assessing eligibility for benefits, Medicaid will examine any transfers made for less than fair market value during the five (5) year look-back period. It does not matter if the gifts you have made are under or over $15,000. The transfers are totaled and a formula applied that determines how long you must wait to receive benefits (this assumes that you are eligible for benefits in all other respects). The current look-back period is five years preceding the date of application for benefits.
Contact me personally today to discuss your New Jersey special needs trust matter. I am easy to talk to, very approachable and can offer you practical, legal ways to handle your concerns. You can reach me toll free at (855) 376-5291 or e-mail me at fniemann@hnlawfirm.com.
By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County New Jersey Medicaid Attorney