Should I Give My Kids my House to Protect It From Medicaid?
You may be afraid of losing your home if you have to enter a nursing home and apply for Medicaid. This fear is well-founded,...
Read moreGifting money to children is permissible, but it may impact Medicaid long-term care eligibility if apply for the program within five years of the gift.
The IRS gift tax exclusion and Medicaid's asset transfer rules are separate. However, gifts exempt from gift tax may still affect Medicaid eligibility.
If you have money to give your children, you certainly can, but you should be aware that you may face consequences should you apply for Medicaid long-term care coverage within five years after each gift.
In 2025, you can give up to $19,000 to any one individual and not have to report the gift to the Internal Revenue Service (IRS). This $19,000 figure is the amount of the current gift tax exclusion. You can give this amount to as many people as you like.
Local Elder Law Attorneys in Your City
If you give away more than $19,000 to any one person in a single year (other than your spouse), you will have to file a gift tax return. However, this does not necessarily mean you’ll pay a gift tax. You’ll have to pay a tax only if your reportable gifts total more than $13.99 million (in 2025) during your lifetime. This figure is the lifetime gift and estate tax exemption.
Medicaid is a joint federal-state program that helps seniors and people with disabilities across the United States pay for their health care costs, which may include long-term care services. The program specifically seeks to support those with extremely limited means. To be eligible for Medicaid in most states, you must therefore have no more than $2,000 in assets (or $3,000 for a married couple).
Many older adults end up relying on Medicaid’s long-term care benefits when they can no longer safely live at home and find that they need to move to a nursing home or similar facility. To qualify for Medicaid coverage of long-term care, however, you may need to drastically spend down your income and savings to reach the asset limit set by your state's Medicaid agency.
Medicaid allows you to "spend down" on specific types of expenditures. These include prepaying for your funeral services or paying off your medical bills. The catch, however, is that if you transfer your money or property within five years of applying for Medicaid (with certain exceptions), you will face a penalty that renders you ineligible for the program a period of time.
Many people believe that if they give away an amount equal to the current $19,000 annual gift tax exclusion, this gift will be exempt from Medicaid’s five-year lookback at transfers that could trigger a waiting period for benefits; however, this is not the case.
The gift tax exclusion is an IRS rule, and this IRS rule has nothing to do with Medicaid’s asset transfer rules.
While the $19,000 that you may have given to your child or 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. You may be able to argue that the gift was not made to qualify you for Medicaid, but proving that will certainly be an uphill battle.
If you think there is a chance you will need Medicaid coverage of long-term care in the foreseeable future, speak with an experienced elder law attorney near you before starting a gifting plan.
For further relevant reading on qualifying for Medicaid, check out the following articles:
You may be afraid of losing your home if you have to enter a nursing home and apply for Medicaid. This fear is well-founded,...
Read moreMy eldest brother, who is my mom's agent under a power of attorney, has put my mom in a nursing home. She does not want to be...
Read moreHow much money can I gift to my children and grandchildren each year without tax penalties to me or to them?
Read moreIn addition to nursing home care, Medicaid may cover home care and some care in an assisted living facility. Coverage in your state may depend on waivers of federal rules.
READ MORETo be eligible for Medicaid long-term care, recipients must have limited incomes and no more than $2,000 (in most states). Special rules apply for the home and other assets.
READ MORESpouses of Medicaid nursing home residents have special protections to keep them from becoming impoverished.
READ MOREIn addition to nursing home care, Medicaid may cover home care and some care in an assisted living facility. Coverage in your state may depend on waivers of federal rules.
READ MORETo be eligible for Medicaid long-term care, recipients must have limited incomes and no more than $2,000 (in most states). Special rules apply for the home and other assets.
READ MORESpouses of Medicaid nursing home residents have special protections to keep them from becoming impoverished.
READ MORECareful planning for potentially devastating long-term care costs can help protect your estate, whether for your spouse or for your children.
READ MOREIf steps aren't taken to protect the Medicaid recipient's house from the state’s attempts to recover benefits paid, the house may need to be sold.
READ MOREThere are ways to handle excess income or assets and still qualify for Medicaid long-term care, and programs that deliver care at home rather than in a nursing home.
READ MORECareful planning for potentially devastating long-term care costs can help protect your estate, whether for your spouse or for your children.
READ MOREIf steps aren't taken to protect the Medicaid recipient's house from the state’s attempts to recover benefits paid, the house may need to be sold.
READ MOREThere are ways to handle excess income or assets and still qualify for Medicaid long-term care, and programs that deliver care at home rather than in a nursing home.
READ MOREMost states have laws on the books making adult children responsible if their parents can't afford to take care of themselves.
READ MOREApplying for Medicaid is a highly technical and complex process, and bad advice can actually make it more difficult to qualify for benefits.
READ MOREMedicare's coverage of nursing home care is quite limited. For those who can afford it and who can qualify for coverage, long-term care insurance is the best alternative to Medicaid.
READ MOREMost states have laws on the books making adult children responsible if their parents can't afford to take care of themselves.
READ MOREApplying for Medicaid is a highly technical and complex process, and bad advice can actually make it more difficult to qualify for benefits.
READ MOREMedicare's coverage of nursing home care is quite limited. For those who can afford it and who can qualify for coverage, long-term care insurance is the best alternative to Medicaid.
READ MOREDistinguish the key concepts in estate planning, including the will, the trust, probate, the power of attorney, and how to avoid estate taxes.
READ MORELearn about grandparents’ visitation rights and how to avoid tax and public benefit issues when making gifts to grandchildren.
READ MOREUnderstand when and how a court appoints a guardian or conservator for an adult who becomes incapacitated, and how to avoid guardianship.
READ MOREWe need to plan for the possibility that we will become unable to make our own medical decisions. This may take the form of a health care proxy, a medical directive, a living will, or a combination of these.
READ MOREDistinguish the key concepts in estate planning, including the will, the trust, probate, the power of attorney, and how to avoid estate taxes.
READ MORELearn about grandparents’ visitation rights and how to avoid tax and public benefit issues when making gifts to grandchildren.
READ MOREUnderstand when and how a court appoints a guardian or conservator for an adult who becomes incapacitated, and how to avoid guardianship.
READ MOREWe need to plan for the possibility that we will become unable to make our own medical decisions. This may take the form of a health care proxy, a medical directive, a living will, or a combination of these.
READ MOREUnderstand the ins and outs of insurance to cover the high cost of nursing home care, including when to buy it, how much to buy, and which spouse should get the coverage.
READ MORELearn who qualifies for Medicare, what the program covers, all about Medicare Advantage, and how to supplement Medicare’s coverage.
READ MOREWe explain the five phases of retirement planning, the difference between a 401(k) and an IRA, types of investments, asset diversification, the required minimum distribution rules, and more.
READ MOREFind out how to choose a nursing home or assisted living facility, when to fight a discharge, the rights of nursing home residents, all about reverse mortgages, and more.
READ MOREUnderstand the ins and outs of insurance to cover the high cost of nursing home care, including when to buy it, how much to buy, and which spouse should get the coverage.
READ MOREWe explain the five phases of retirement planning, the difference between a 401(k) and an IRA, types of investments, asset diversification, the required minimum distribution rules, and more.
READ MOREFind out how to choose a nursing home or assisted living facility, when to fight a discharge, the rights of nursing home residents, all about reverse mortgages, and more.
READ MOREGet a solid grounding in Social Security, including who is eligible, how to apply, spousal benefits, the taxation of benefits, how work affects payments, and SSDI and SSI.
READ MORELearn how a special needs trust can preserve assets for a person with disabilities without jeopardizing Medicaid and SSI, and how to plan for when caregivers are gone.
READ MOREExplore benefits for older veterans, including the VA’s disability pension benefit, aid and attendance, and long-term care coverage for veterans and surviving spouses.
READ MOREGet a solid grounding in Social Security, including who is eligible, how to apply, spousal benefits, the taxation of benefits, how work affects payments, and SSDI and SSI.
READ MORELearn how a special needs trust can preserve assets for a person with disabilities without jeopardizing Medicaid and SSI, and how to plan for when caregivers are gone.
READ MOREExplore benefits for older veterans, including the VA’s disability pension benefit, aid and attendance, and long-term care coverage for veterans and surviving spouses.
READ MORE