Annual Gift Tax Exclusion vs. Medicaid Look back Period

Clients will frequently ask: How much can I give away before a gift tax return is necessary?
 
For 2016 up to $14,000 per year per person. [1] Just because you don’t have to file a gift tax return, does not mean you avoid all future penalties on the gift.

The following explains how your gift could create a penalty for you (or your spouse) in the future.
 
60 month look back period for Medicaid
 
If you (or your spouse) to go into a long-term care facility or nursing home and apply for Medicaid, there is a penalty imposed on recent gifts. Specifically, gifts made within the last 60 months, or five years, prior to applying for Medicaid. [2]
 
The IRS annual gift exclusion does not provide any exemption from the Medicaid look back period. If you made a gift within the prior 60 months, the result will be a penalty period from Medicaid coverage.

For questions on estate planning or asset protection, feel free to contact Elliott Stapleton. 

Read more at on CMRS Law's website

​[1] Source: https://www.irs.gov/businesses/small-businesses-self-employed/whats-new-estate-and-gift-tax

[2] Source: Ohio Administrative Code 5160:1-3-07.2 Medicaid: transfer of resources. http://codes.ohio.gov/oac/5160:1-3-07.2v1

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