When Is Three Years Not Three Years?
Here are several scenarios. The question is: When, if ever, does Mom become eligible for Medicaid benefits? As in law school exams, ignorantia legis non excusat.*
Mom gave $80,000 to her daughter twelve months ago. Mom gives all of her money ($40,000) to daughter today. Mom enters a nursing home tomorrow and applies for Medicaid. In January, 1999, Mom gave daughter $100,000. Mom enters a nursing home tomorrow and applies for Medicaid. In March of 1998, Mom put daughters name on her $125,000 house. Mom enters a nursing home tomorrow and applies for Medicaid.
The analysis begins as of the earliest day on which Mom is both in the nursing home and has applied for Medicaid. This is known as the snapshot or trigger date. Medicaid looks at her assets as of this date. If she is married, then the rules for a division of assets under the Spousal Impoverishment Provisions apply.
If she is single, then she will have to simply spend her assets down to $2,000 if she is a South Carolina resident.
You may recall from our earlier newsletters that certain assets are exempt. They include the following:
Residence
Vehicle
Personal Property
$1,500 Cash Value Life Insurance
Irrevocable Pre-paid Funeral Plan
The other assets count. The trigger or snapshot date opens a window backwards of 36 months through which DSS in South Carolina may identify gifts. (The window for transfers to trusts is 60 months.) The Medicaid agency then combines all the fits that fall within the window and divides the total by the state-mandated average cost per month for nursing home care. In South Carolina, this is currently $3,497 per month. The result is the number of months the giver is ineligible for Medicaid benefits. The ineligibility begins on the first day of the months in which the gift was given. The rest is arithmetic.
ANSWERS:
Not yet. Mom has not applied.
In South Carolina, not for 20 months, i.e. $40,000 divided by $3,497 per month penalty equals 20 months. Typically the $3,497 number is changed each year.
Immediately. The gift is not in the three year look back window.
This is a gift of $62,500, resulting in a penalty in South Carolina of 18 months.
................I'm trying to determine the time frame during which a person can not get rid of their assets so that those assets can not be used for nursing home care. It is so many months or years before they would enter a nursing home. You can not wait until 2009 to give you assets away and enter a nursing home 6 months later. I've contacted the IRS and the issue is a state issue. I contacted the SC Dept. of Revenue with this question:
I understand that if an elderly person plans to enter a nursing home at some time in the future, there is a time frame before which they would enter a facility, during which they can no longer transfer assets out of their name, to protect them from being used for nursing home care.
I'd like to know what the state rules are that govern a person giving away or reducing their liquid assets so that they can be protected from long term care cost.
and got this response. "South Carolina does not have a gift tax. The gift tax ended here effective 1/1/92". My question had zero to do with gift tax.
can anyone interpret the above examples? It names 3 scenarios but I see only 1 answer.
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