Gifts
Some people may be tempted to give away assets in order to meet Medicaid requirements. This can be problematic because Medicaid has rules that penalize people if they give away money or other assets in order to qualify for benefits. Gifts made during the lookback period will be presumed improper and will result in a disqualification period from Medicaid benefits, known as a penalty period. This applies to gifts made to an individual or to an irrevocable Trust.
It’s important to understand what is a gift and what is not, and don’t make any intentional gifts without first talking to a Medicaid Planner.
What Qualifies as a Gift?
A gift is the act of giving another person or entity something of monetary value and not receiving fair market value in return. Examples include:
- Giving money to children or grandchildren
- Giving away physical assets like a home or a vehicle
- Selling property for less than fair market value
- Transferring assets into an irrevocable trust
What Does not Qualify as a Gift?
- Giving money or property to a spouse before becoming Medicaid-eligible
- Giving money or property to a disabled child
- Selling an asset in which fair market value is received
The Lookback Period
The “lookback” period describes how far back in time Medicaid will “look” to determine if any gifts were made. The lookback period is five years from the date of the Medicaid application. During the Medicaid application process, the Medicaid caseworker will review financial records and bank statements from the previous 60 months to determine if any gifts were made. If gifts were made, the applicant will be assessed a penalty period.
The Penalty Period
Any gifts made during the lookback period it will result in a penalty period. The penalty period refers to the length of time someone is ineligible to receive Medicaid benefits due to improper gifts made during the lookback period. The penalty period is calculated by dividing the total amount of all gifts made during the lookback period by the state penalty divisor ($7,787 in 2025). The result is the number of months in the penalty period.
