The holiday season is just around the corner. So tradition entails gift giving to family and friends. For many, gifting $14,000 according to the IRS’s Gift Tax Exclusion is the perfect holiday gift. The annual Gift Tax Exclusion is the total sum of money per year that an individual may gift to an unlimited number of people without having to file a gift tax return or pay any gift taxes. Married couples may combine their annual exclusions, allowing them to gift $28,000 to each recipient.

While gifting is certainly allowed according to the IRS, Medicaid views gifting differently. No monies may be gifted within the five years prior to an applicant’s Medicaid eligibility date. Should Medicaid identify gifts or transfers when scrutinizing the financial history of the applicant, a Medicaid penalty will be assessed. The penalty will disqualify the applicant from Medicaid benefits for a period of time corresponding to the amount of care the gifted monies would have provided.This calculation is made using the CT Medicaid (Title XIX) penalty divisor rate of $11,851.00 per month.That would mean that if an individual gifted $11,851.00, they would would have one month of ineligibility for Medicaid benefits.

Seniors must exercise caution when gifting to family and friends, as they may be jeopardizing their Medicaid benefits.

Happy Holidays!