How Much Money Can My Dad Keep If He Goes Into A Nursing Home Pa

Disclaimer: This article has been posted for full general information purposes but. Y'all should non human action upon the information in this article without first retaining legal counsel.

Past Robert C. Gerhard, Iii, Esquire

The Medicaid Gifting Trouble

Gifts tin create ineligibility for Medicaid long-term care benefits. Parents sometimes help their children financially. Grandparents requite money to their grandchildren. Unfortunately if that parent or grandparent is admitted to a nursing dwelling house within 5 years of such gifting and needs to utilize for Medical Aid (Medicaid) long-term intendance benefits there could be bug, sometimes large problems. Specifically, the awarding for benefits could exist denied for a menstruation of time. This is known as the "Medicaid transfer penalisation." Large gifts tin create long periods of ineligibility for Medicaid long-term intendance benefits.

Medicaid Transfer Penalisation

The 2022 transfer penalty in Pennsylvania is ane day for every $482.50 that was given away. This figure of $482.fifty is known as the 2022 "daily punishment divisor" and represents the boilerplate daily cost of nursing home intendance in Pennsylvania. The punishment divisor is revised annually for inflation. To illustrate, if a gift of $10,000 has been made within the 5-year look-back, the period of ineligibility would exist 20 days. $x,000 divided by $482.50 = twenty days of ineligibility. Partial days of ineligibility are not counted. There are exceptions, but parents and grandparents demand to be super conscientious when making gifts, especially large gifts.

I major problem with the transfer penalty is that it does not commence until the Medicaid bidder is "otherwise eligible" for nursing home care. To make matters worse, it can sometimes take several months before the family unit receives a denial notice (Form PA-162) from the caseworker at the Canton Assistance Office identifying the transfer punishment as a problem.

Past the time the family is alerted to transfer penalty effect, the harm has been washed and can exist quite difficult to contrary. The unpaid nursing home bill can result in the facility suing the family. In this situation the nursing domicile resident's assets have oftentimes been depleted so there is little remaining cash to address the unpaid nursing home beak.

If it can be done safely, taking a parent out of a nursing habitation is i potential way to mitigate the harm and allow the transfer penalty to expire without incurring additional nursing home bills. Because nursing home placement is a last resort for most families, taking a parent home is ofttimes this is not a realistic option. Leaving the nursing home volition not reverse the beak that has accrued between the date of admission and the appointment the gifting problem is discovered.

Children and Spouses Tin be Sued

If the gifting is not addressed properly, the nursing home will exist unpaid by Medicaid. The nursing home tin can then sue the children and spouse of the nursing domicile resident (whatever ane or all of them, regardless of who received the offending souvenir) under Pennsylvania'south filial support law. Even the children who did not receive any gifts can exist sued by the nursing home for the nugget transfers a parent fabricated to other children. (Yes, in Pennsylvania this is true.) Although there are exceptions, Pennsylvania constabulary provides that children tin can be sued for their parents' unpaid nursing home bills, regardless of fault. Nursing homes routinely use this law to file collection lawsuits against the children of a nursing dwelling resident where the bill is unpaid. Ill-advised gifting can therefore generate litigation that impacts a whole family – not just the nursing home resident.

Nursing Home Admission Denied

Nursing homes desire to avoid admitting residents who will run out of private pay money and be denied Medicaid benefits due to gifting issues. Nursing domicile admissions offices ask whether gifts have occurred in the 5-year look-back and sometimes review financial statements before admitting a resident. If the facility discovers that gifting has occurred, the admissions representative may be broken-hearted about the Medicaid application being denied when individual pay funds run out, and may refuse to admit the senior to their nursing facility. This means that the parent or grandparent who has made big gifts within the 5-yr wait-back period may not be admitted to the nursing dwelling of pick when that care is needed.

Exception for Pocket-sized Gifts

In Pennsylvania, the Department of Human Services has a policy of not penalizing certain smaller gifts. At the time of this writing, gifts that total less than $500 in a given month (in aggregate) generally do not cause any menstruum of ineligibility. This exception is for gifting of $500/month in total, non $500 per person per month. If more than $500 has been gifted in a given month in total, so the exception does not employ. If at that place take been cash withdrawals from a bank account, these withdrawals may be presumed as gifts by the Medicaid caseworker reviewing an awarding and can exist added to the monthly total, sometimes resulting in the imposition of a transfer punishment. No gifting should occur without having get-go secured communication from a knowledgeable elder law chaser.

Adding a Child to a Bank Account

Calculation a child to a checking account or savings business relationship as a joint owner is not normally treated every bit a gift under Pennsylvania law, even if the addition occurred during the five-year expect-back. Simply adding the name of a kid to the bank account is not a transfer that would cause a period of ineligibility for Medicaid long-term care benefits. This is because under Pennsylvania police force, a deposit account is endemic by those whose names are on the business relationship in proportion to their respective contributions. If the parent deposited 100% of the money to a depository financial institution account, Medicaid treats the unabridged bank account equally a resource of the parent, even if one or more children have been added as joint owners. Notwithstanding, if the child subsequently withdraws coin from a articulation bank account, a gift is accounted to have occurred at that moment. If the withdrawal by the child is inside the v-year look-back and then the withdrawn funds can requite rise to a transfer punishment.

Adding a Child to Real Estate

To the extent your son or girl does not pay off-white market value for the dwelling house, a gift has occurred. Selling your house to anyone for $1 is considered a gift, and if washed inside the 5-years prior to an application for Medicaid long-term care benefits, can requite rise to a transfer penalty and a denial of benefits.

There are a number of exceptions to the transfer penalties where a firm is transferred out of the name of a Medicaid applicant. First, the transfer of the residence to a "caregiver child" who lived with the parent can be an exempt transfer if the help provided past that caregiver child kept the parent out of a nursing dwelling house for more than than two years. If properly accomplished, this transfer does non give ascent to a flow of ineligibility for Medicaid long-term intendance benefits. Second, the transfer of a home to a sibling with an disinterestedness interest in the property can also be exempt if the sibling lived in the holding for at to the lowest degree one year prior to the Medicaid applicant'south nursing dwelling house admission. Third, the transfer of resident belongings to a disabled child, or to a trust for the sole do good of a disabled person, is exempt from the Medicaid transfer penalties.

Each example is different, then be certain to retain legal counsel earlier transferring ownership of any real estate. Although the transfer of real estate may be exempt from the Medicaid transfer penalties, there may be many other expert reasons to not transfer the existent estate. Be enlightened that avoiding the risk of loss to nursing dwelling costs by transferring the home to a child or other person may not be in your best interest, and may subject the domicile to other risks of loss, such as a kid'southward bankruptcy, divorce, lawsuits, or unexpected death.

If a Medicaid application for long-term care benefits occurs within 5-years of a not-exempt transfer, the home tin be returned in club avoid the imposition of a Medicaid transfer penalty and "cure" the trouble. However, in many cases this is easier said than done. If the person who received the real manor is unwilling or unable to render information technology, then a lengthy transfer penalty is likely to exist imposed.

There are also many tax issues to consider before making any existent estate transfer. Notably capital gains tax problems need to exist considered, too as inheritance revenue enhancement. Transferring your habitation outright to a child who does not live in the property can consequence in a large capital gains taxation nib when your child later goes to sell the dwelling. Also, if yous give away your habitation nonetheless continue to reside in it, the Pennsylvania Department of Revenue can argue that you impliedly retained lifetime rights to use and occupy the home, thereby subjecting the unabridged value of your home to Pennsylvania inheritance tax.

Exceptions for Transfers to Disabled Individuals

Transfers to disabled children tin be exempt from the normal Medicaid transfer penalties. Public policy favors such transfers, and the laws are written in a way to not unduly restrict gifts for the sole benefit of disabled individuals. Care must be taken not to make outright gifts to children who are themselves receiving public benefits such as SSI or Medicaid. Fifty-fifty though outright gifts to such children would not crusade a parent to be ineligible for Medicaid long-term intendance benefits, the outright gift to the kid could return the kid ineligible for Medicaid or SSI benefits. Transfers to disabled children receiving SSI or Medicaid benefits are usually best made to special needs trusts. Special needs trusts, also called supplemental needs trusts, are drafted in a way that the funds in the trusts supplement just do not supplant the disabled kid's public benefits. Gifts to non-children can likewise exist fabricated without causing ineligibility for Medicaid long-term care benefits, but those gifts need to be made to trusts. To summarize, gifts to disabled children can be made outright, but gifts to other disabled individuals need to exist made to trusts for the sole benefit of the disabled person. These are known as "third party trusts" and they do not need to take a "Medicaid pay-back" provision.

No Exception for Annual Exclusion Gifting

Gifts inside the exemption from federal gift tax are still subject to the Medicaid transfer penalty. Under §2503(b) of the Internal Revenue Code, gifts of $16,000 per person per calendar year are exempt from federal gift tax for 2022. As a event, many people believe they can requite $16,000 amount away each twelvemonth to each of their children without a Medicaid problem. Although there are exceptions, this belief is generally not true. If such gifting falls inside the five-year wait-dorsum, so these annual exclusion gifts can indeed result in the denial of an application for Medicaid long-term intendance benefits. For case, v years of annual exclusion gifts to a child, at $16,000 per year, means that there would exist $80,000 of gifting in the threescore-month look-dorsum. That translates into a transfer punishment of 165 days of Medicaid ineligibility. ($80,000 divided past $482.fifty = 155 days of ineligibility). It is possible to appeal the denial, or asking an undue hardship waiver of the transfer penalty.

Curing the Transfer Penalisation

The transfer penalisation problem can be cured by a full render of the gift. Unfortunately most children and grandchildren have spent the coin and are non in a position to render the funds they have received. Partial cures of gifted assets may not be accepted by the Pennsylvania Department of Human Services as reversing the transfer penalization.

Using Your Resource Allowances to Pay Nursing Home

Medicaid applicants with less than $2,523 in gross income (2022) can accept up to $8,000 in not-excluded resource, such every bit cash in a checking business relationship. If the transfer punishment is small-scale plenty, then this $8,000 resource allowance can be used to square up with the nursing home and accost the transfer penalization caused by the gifting. For instance, a souvenir of say $3,000 in the 60-month look-back could give rising to a vi solar day menstruum of ineligibility. ($three,000 divided past $482.50 = six days of ineligibility.) If the private pay nursing home charge per unit is $525/day, then the $three,000 of gifting can crusade a $three,150 problem. Instead of asking the children to return the gifted money, an additional $iii,150 could exist paid to the nursing home, leaving the recipient with $4,850.00, rather than the total $eight,000 resources limit. Similarly, in the instance of a husband and wife where one is in the nursing domicile, the spouse in the customs is permitted to retain a larger resource assart in gild to avoid impoverishment. If the transfer penalty cannot be reversed on appeal or waived due to undue hardship, and then these spousal assets can exist used to address the nursing home bill caused by the transfer penalty. Certainly this tin get out the spouse at home financially vulnerable.

Exceptions and Appeal Options May Exist

Earlier a senior makes any gifts, it is highly recommended that they seek the advice of an elder law attorney. In that location are exceptions to the transfer penalties, especially when the gift was for a purpose exclusively for a purpose other than to authorize for Medicaid benefits. If you have been denied long-term intendance benefits due to gifting that has occurred within the five-year look-back, at that place are ways to appeal the denial. Our law office handles Medicaid applications and appeals primarily in Montgomery County, Bucks County, and Philadelphia County.

Nigh Gerhard & Gerhard

Robert C. Gerhard, 3 Esquire is the managing shareholder of Gerhard & Gerhard, P.C., an estate planning and elder law firm located in Montgomery County, Pennsylvania. Chaser Gerhard specializes in elder law, with accent on Medicaid Planning, Medicaid Applications, and Medicaid Appeals. He is the author of the Pennsylvania law treatise, Pennsylvania Medicaid, Long-term Care. He tin can be reached at (215) 885-6785 or Contact Usa with questions or comments.

Source: https://www.paelderlaw.net/gifts-to-children-and-grandchildren-can-create-ineligibility-for-pennsylvania-medical-assistance-medicaid-long-term-care-benefits/

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