Your Legal Rights at Work

Gifting Cash Or Assets Can Disqualify You For Medicaid Assistance

by Lewis Hamilton

Most people don't think twice about giving friends and family members gifts, but your generosity can hurt your eligibility for Medicaid benefits. Here's more information about this issue and how you can combat it.

Preventing Eligibility Fraud

Medicaid is a government program designed to help low-income individuals access necessary medical care. Because eligibility is primarily based on income, it's not unusual for people to get rid of some of their assets to reduce their gross income to below the maximum level, which is based on the federal poverty level and varies between states.

The agency considers this a form of fraud and will penalize anyone it thinks is guilty of it by forcing them to wait several months—and even years—before it will even consider the person's application. Thus, giving property and money to people you love can be misconstrued as attempting to beat the system and qualify for Medicaid when you really aren't eligible.

To make matters worse, the agency's look back period is 60 months, which means Medicaid will review your financial records for the previous 5 years to see what you've been doing with your money. So, the car you gave to your eldest grandchild three Christmases ago can negatively impact your current eligibility for Medicaid.

Proving the Asset Transfer was Valid

The good news is, you can avoid being penalized by Medicaid giving away money and property by proving the asset transfer was valid. This can be challenging because it involves showing you didn't make the transfer to qualify for the program. This typically requires you to prove some combination of the following:

  • You still had plenty of assets left over after the transfer
  • You weren't sick or needed Medicaid at the time the transfer was made
  • You have a habit of giving monetary or property gifts
  • You made the transfer on the advice of an accountant or estate planning attorney

For instance, you wanted to leave your son or daughter your home after you pass away. However, your estate attorney recommended you transfer the title to your child as a way to avoid probate court. You would need to submit proof (e.g. a letter from the lawyer) showing you followed this advice as part of your estate planning and not to reduce your assets to get into the Medicaid program. It would probably also help if you could prove the amount of money and assets you had left over at the time still would have been too much to qualify for coverage.

If you were denied Medicaid coverage because of how you handled your assets in the past, contact an elder law attorney to learn about your legal options for fixing the problem.