In September, Catherine J. enters a long-term care facility. Her only income is $1,500.00 a month from Social Security, which is below the maximum amount of $2,313.00 allowed to qualify for Medicaid. Catherine has no assets, other than her home, which is not a countable resource for purposes of qualifying for Medicaid. Therefore, she meets the criteria of having no more than $2,000.00 in countable resources. However, in January of this year she gave her daughter, Florence, $25,000.00. Will this gift disqualify Catherine from Medicaid benefits, and, if so, for how long? Does Florence lose all of the gift?

A gift, defined as something transferred for less than fair market value, within five years of applying for Medicaid, creates a waiting period to qualify for Medicaid benefits. The time period of the delay is calculated by dividing the gift by a daily divisor, which Medicaid changes from time to time.

Therefore, Catherine’s gift will delay her qualification date for Medicaid.  

As of Sept. 1, the divisor into which the $25,000.00 is divided is $213.71, resulting in a delay of 117 days to qualify. Fortunately, this time period can be reduced. Here’s how.

Catherine’s Social Security check is applied to the monthly facility cost. Assume that the balance due for room and board for September is $2,000.00, based upon the daily rate. Also assume that Catherine incurs additional facility expenses of $1,739.00, all of which Florence pays. Medicaid deducts these amounts from the gift amount.

As of Oct. 1, the gift is now $21,261, which reduces the penalty period to 99 days, with 31 days of penalty served.

Florence pays $2,150.00 toward October’s room and board, with no extra expenses incurred. This amount reduces the gift to $19,111.00 as of November 1. In November, Florence pays a total of $2,410.00 for room, board and expenses. As of December 1, the gift is $16,700.00, the penalty period is 78 days and the days of penalty served are 92. When the days of penalty served are greater than the days of penalty assessed, Catherine qualifies for Medicaid. Therefore, beginning on December 1, Medicaid pays for Catherine’s long-term care expenses.

Based upon the method used for calculating the penalty period, Florence, as the giftee, retains $14,445.00 of the original gift of d$25,000.00  

Sandra W. Reed is an attorney with Katten & Benson, an Elder Law firm in Fort Worth. She lives in beautiful Somervell County, near Chalk Mountain.