Something to be aware of when you or a loved one is applying for Medicaid is the Medicaid gift penalty. If you or your loved one has given a substantial gift to someone in what is called the lookback period they can be subject to a penalty that will suspend their Medicaid benefits for a number of months.
The Lookback Period
The lookback period is the five-year period of time that occurs prior to applying for Medicaid benefits. Any gift given during those five years will be subject to investigation for the Medicaid penalty. The number of gifts doesn’t matter; the gift amounts are totaled up and divided by what is known as the penalty divisor. This amount differs from state to state, so you may want to investigate what it is for the state that you live in. The result of dividing the amount of gifts given by the divisor is the length of the penalty period.
The Penalty Period
The penalty period, like the lookback period, begins on the day that you or your loved one becomes eligible for Medicaid. This period of time, a specific number of months, is the amount of gift money divided up by the divisor amount for your state. During this period of time, all Medicare benefits are suspended. At the end of the penalty period, the eligibility will be reinstated and Medicare benefits can be collected.
Contact Stano Law Group for any legal assistance or elder law questions concerning Medicaid benefits.