Lessons Learned

New laws were passed in February, 2006 that changed the landscape of how the Medicaid regulations are administered, specifically in the areas of gifting, the penalty period created for gifting, the look back period, annuities, equity value in a person’s home and entrance deposits for retirement communities. The new laws are referred to as the Deficit Reduction Act of 2005 or “DRA”.

As a result of how the penalty is now calculated for “gifts” made after February 2006, this person is faced with potentially not receiving Medicaid benefits for a year and a half as a result of what she had given her children over the preceding years. Unfortunately, she has very little money available to her now and there are no gifted assets to return to the mother to help with the penalty that has been created in this situation.

Assets given away for no consideration are technically treated as “gifts” under the Medicaid Program if they were made for the sole purpose of qualifying for Medicaid. In the instant case the gifts were not made for that purpose. However, this is a very difficult argument to prove and win.

The purpose of this case study is to demonstrate that the most innocent of gestures can have devastating effects when a long term care crisis occurs and Medicaid benefits are needed. There are options for this family and it is possible to prevail and obtain Medicaid eligibility. The lesson here is to plan several years before you may feel that long term care may be an issue. The State of Maryland will look back three years to review a person’s financial activity. If this sounds familiar, please seek expert advice on how to properly accomplish “gifting” and the preservation of assets to help avoid pitfalls to Medicaid eligibility such as this one.

Every situation is unique and like most families facing a long term care crisis, you’re looking for solutions. The answers are not easy, but understand that there is a right way and wrong way to go about planning and managing a long term care crisis and you CAN protect assets to preserve qualify of life and fulfill the dream of leaving a legacy.

There is so much information that circulates our communities, most of which is misinformation. Don’t become overwhelmed and burdened by the unknown. Let us help you discover the answers, create a plan and protect the future of your loved ones.