Page 92 - Lubbock Senior Link Magazine Fall 2019- Online Magazine

HONORING SENIORS
Gift of Giving

andLong-Term Care

o doubt you have heard that, to qualify for an applicant will be ineligible. For instance, if your net
certain Medicaid or Veterans Administration worth equals $175,000 and you gave your child $50,000,
N(VA) programs, specifically Medicaid nursing the penalty would run for twenty-one months ($47,939
home assistance and the VA’s Non-Service Connected of the gift divided by $2,230 to equal 21.49 months,
Pension (NCP), sometimes called Aid & Attendance, then round down). Therefore, you cannot make gifts
you must “get everything out of your name” by to qualify for VA benefits any more than you can for
giving your property away, usually to your children. Medicaid.
These programs offer benefits to people who qualify
based on financial and medical need, but both impose As the elder population has increased, long term care
consequences when an applicant gives away property assistance has become more critical. Whether you
in order to qualify. Although both programs have anticipate applying for Medicaid or VA benefits, asset
extensive qualification requirements, this article focuses protection and estate planning with a qualified legal
on how each handles gifting. professional provides the best opportunity to protect
what you have and ensure a successful application.
Medicaid refers to any gifts made during the five years
prior to application as “transfers” which is short for Andrea M. Gray is a Partner with Fargason, Booth, St.
“transfers for less than fair market value.” Any time Clair, Richards & Wilkins in Lubbock and practices elder
you purchase goods or services, you make a transfer, law in the states of New York and Texas. More information
but if you get less than what you paid for, it is a transfer
for less than fair market value, and the transfer is a gift can be found at www.lawyersoflubbock.com.
to the extent that you overpaid. Certainly, if you give
your cash or your house to someone and take nothing Lee Franks is a Partner with Franks & Pleasant in Lubbock
in the exchange but love and affection from the person and practices elder law in Texas. More information can be
receiving it, you have made a gift. Unfortunately, found at www.fplawteam.com.
Medicaid and the VA place no value in love and
affection. Similarly, if you give someone your $100,000
house for $1, you have made a gift of $99,999, and if you
pay someone $10,000 for certain goods or services worth
$1,000, you have made a $9,000 gift.

Medicaid reasons that if you gave away money or
property, you could have at least used it to pay for your
room and board at a skilled nursing facility. In Texas,
the average nursing home charges a daily rate of $172.65,
so Medicaid will penalize a transfer by not paying the
nursing home for the number of days that gift would
have covered. For example, a $9,000 gift results in a 52-
day penalty. But the penalty only runs if you reside in a
nursing home and have qualified for Medicaid except for
the gift.

Similarly, the VA recently imposed a look-back period
of three years. On October 18, 2018, the VA imposed
a new rule that you may not have more than $127,061
(effective 12/1/2018) in net worth (income and assets)
and be eligible for pension benefits. Any gifts in the prior
three years would be penalized. The VA penalty period
starts the month after the transfer is made, and while
the VA only looks back three years, they can penalize
an applicant up to five years. In determining the length
of the penalty period, the VA calculates the amount of
resources that were transferred over the $127,061 limit,
then divides that amount by a monthly divisor (currently
$2,230). That calculation equals the number of months

92 Lubbock Senior Link