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Even Annual Exclusion Gifts Are Counted by Medicaid
- March 5th, 2018
Many people believe that if they give away an amount equal to the annual gift tax exclusion – currently $15,000 to any one individual – this gift will be exempted from Medicaid's five-year look-back at transfers that could trigger a waiting period for benefits. Nothing could be further from the truth.
The gift tax exclusion is an IRS rule. Any person who gives away $15,000 (in 2018) or less to any one individual does not have to report the gift or gifts to the IRS. If you give away more than $15,000 to any one person (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 only have to pay a tax if your reportable gifts total more than $11.18 million (estimated 2018 figure) during your lifetime.
Local Elder Law Attorneys in Ashburn, VA
Law Offices of John L. Laster
John Laster is a lawyer licensed to practice in Virginia, Maryland and the District of Columbia. He limits his practice to wealth transfer planning, trusts, wills, powers of attorney, health care decision-making issues, estate administration and related tax, elder law and disability concerns. Listed in The Best Lawyers...
Hale Ball Carlson Baumgartner Murphy PLC
Attorney Samantha Simmons Fredieu is an associate at Hale Ball. Ms. Fredieu graduated magna cum laude from Vermont Law School where she was the symposium editor on the Vermont Law Review, a production editor on the Vermont Journal of Environmental Law, and a member of the Moot Court Advisory Board. She has clerked for...
Margaret A. O'Reilly, PC
Margaret A. O’Reilly is an estate planning and elder law attorney with over thirty-five years of legal experience. Attorney O’Reilly graduated from Duke University with a degree in psychology, and received her law degree from Northeastern University School of Law in Boston, Massachusetts. For over 15 y...
This IRS rule has nothing to do with Medicaid’s asset transfer rules. While the $15,000 that you gave to your 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 is an uphill battle.
If there is a chance you will need Medicaid coverage of long-term care in the foreseeable future, see your elder law attorney before starting a gifting plan.
Last Modified: 03/05/2018