Linda Strohschein, Principal Attorney for Strohschein Law Group, testified to help improve proposed regulations by the Illinois Department of Human Services, Bureau of Appeals and Hearings.
In most states, transferring your house to your children (or someone else) may lead to a Medicaid penalty period, which would make you ineligible for Medicaid for a period of time. However, there are circumstances in which transferring a house will not result in a penalty period.
If you have it to give, you certainly can, but there may be consequences should you apply for Medicaid long-term care coverage within five years after each gift. If you think there is a chance you will need Medicaid coverage of long-term care in the foreseeable future, call Strohschein Law Group before starting a gifting plan.
With careful Medicaid planning, you may be able to preserve some of your estate for your children or other heirs while meeting the Medicaid asset limit. In Illinois, a nursing home resident covered by Medicaid may have no more than $2,000 in “countable” assets.
The spouse of a nursing home resident–called the “community spouse” — is limited to one half of the couple’s joint assets up to $119,220 in “countable” assets. This figure changes each year to reflect inflation. Called the “community spouse resource allowance,” this is the most that a state may allow a community spouse to retain without a hearing or a court order. The least that a state may allow a community spouse to retain is $23,844 and the maximum for Illinois is $109,560. If you should need assistance with protecting your assets from the cost of long term care, Strohschein Law Group helps families everyday to maximize the options for quality care and making sure the community spouse is provided for.
This IRS rule has nothing to do with Medicaid’s asset transfer rules. While the $14,000 that you gave to your grandchild this year will be exempt from any gift tax, Medicaid will still count it as a transfer that could make you ineligible for nursing home benefits for a certain amount of time should you apply for them within the next five years.
Many seniors consider transferring assets for estate and long-term care planning purposes, or just to help out children and grandchildren. Gifts and transfers to a trust often make a lot of sense. They can save money in taxes and long-term care expenditures, and they can help out family members in need and serve as expressions of love and caring. But some gifts can cause problems, for both the generous donor and the recipient.
On the one hand LTCI premiums are high, they may be raised in the future, and if you are purchasing policies in your 50s and 60s, the need is probably many decades in the future. On the other, many are saved by their LTCI, able to choose their own care setting rather than rely on what is covered by Medicaid in their state, more comfortable hiring necessary help if doing so doesn’t mean dipping in to their savings, and able to protect an inheritance for their children and grandchildren.
Increasingly, several generations of American families are living together. According to a Pew Research Center analysis of U.S. Census data, more than 50 million Americans, or almost 17 percent of the population, live in households containing two adult generations. These multi-generational living arrangements present legal and financial challenges around home ownership.
The Centers for Medicare & Medicaid Services (CMS) has released the 2014 federal guidelines for how much money the spouses of institutionalized Medicaid recipients may keep and the limit on how much a home can be worth for its owner to still qualify for Medicaid.