One of the biggest misconceptions around Medicaid qualification for nursing home care and gifts is the belief that gifts of $15,000 each year “don’t count.” That is simply not true.

There are two different sets of federal rules with very different consequences. Under federal estate and gift tax laws, you can give up to $15,000 a year in gifts to as many different individuals as you want… without having to file a gift tax form with the IRS. In other words, you can give your three children $15,000 each for a total of $45,000 without having to file a gift tax return.

Under Medicaid qualification rules, ANY gifts in the five years prior to applying for nursing home Medicaid count, and coverage will be denied for periods of time based on a state-specific number. If you lived in North Carolina and gave away the same $45,000 over five years and then applied for Medicaid, you would be ineligible for coverage for nearly 3 years.

The rules are definitely not the same, and mixing them up can be deadly to a family’s finances.

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