It’s a major Medicaid myth to assume that if you gift money to your children, Medicaid can’t take it away from you. Although it’s technically true that Medicaid can’t take it from you, the state does evaluate all gifts that you’ve made within the previous five years before initiating your application. This is known as the five year lookback period.
Medicaid calls it a divestment when you give your children a house, money or other assets for less than what’s considered fair market value and this imposes a penalty against you. This penalty period will depend on multiple factors including the amount of money you’ve given away. This penalty period is the period of time under which you are not eligible for Medicaid’s financial support, meaning that you’d need to turn to alternative methods to pay for your care.
For most people, this means their own pockets. If you have given away your assets, you don’t have the money that you otherwise could have relied on to self-pay so you’ll be facing a very difficult situation – in other words, you will put yourself between al “rock and a hard place”.
When you are thinking about the possibility of relying on Medicaid for future financial support for long term care needs, you’ll want to have the support of an attorney who is very familiar with how to avoid these mistakes. Set up a time to meet with a Medicaid planning lawyer in New York to craft your plan.