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Gifts Made Within the 5 Year Look-Back Period That Are Permitted

When determining Medicaid eligibility, the Department of Social Services (“DSS”) is required to “look back” for a period of 60 months immediately preceding the first date the applicant was both “institutionalized” and had applied for Medicaid benefits to determine if any asset transfers were uncompensated or made for less than fair market value. If such a transfer was made during that period, the Medicaid applicant may become ineligible for Medicaid benefits for a specified period of time, unless the Medicaid applicant can prove that the assets were transferred exclusively for a purpose other than to qualify for medical assistance. Burden of proof: it is the Medicaid applicant’s burden to rebut the presumption that the transfer of funds was motivated, in part if not in whole, by anticipation of a future need to qualify for medical assistance.

Example: On May 7, 2007, June 20, 2007, and April 7, 2008, Sheri of Smithtown, NY made three transfers of money totaling $82,000 to her daughter and son. Sheri gave her daughter $15,000 to help her pay for a lease on a car and $62,500 to pay off a mortgage on a home that Sheri co-owned with her daughter and son-in-law, and gave her son $5,000 to help pay for the cost of her granddaughter’s trip to Europe. Sheri was 72 years old on the date of the first transfer, and 73 years old on the dates of the latter two transfers. In July 2010, Sheri was placed in an assisted living facility after having, several months earlier, exhibited signs of dementia. In November 2010, Sheri had a nervous breakdown and was placed in a psychiatric facility for several weeks, and then in a nursing home facility. After eight or nine months in the nursing home facility, Sheri had depleted her remaining assets, which had totaled $250,000 in July 2010, and she applied for Medicaid assistance. The DSS accepted the Sheri’s application but imposed a penalty period, thereby denying her of benefits through January 2013, finding that the three transfers were motivated, in part if not in whole, by anticipation of a future need to qualify for medical assistance.

Sheri appealed the decision. The court’s decision: For Sheri.

The Court reasoned that the latest of the transfers was made approximately two years before Sheri started to exhibit signs of dementia. At the time of the transfers and in the years preceding her need for nursing home care, Sheri was in good health and living independently. She was driving, cooking, exercising, and paying her own bills. The transfers themselves constituted gifts to her relatives, and Sheri still had more than $250,000, not including Social Security benefits, following the transfers. Under these circumstances, Sheri met her burden of rebutting the presumption that the subject transfers were motivated by the anticipation of a future need to qualify for medical assistance.

Aaron E. Futterman, CPA, Esq. is a partner in the law firm of Futterman & Lanza, LLP with offices in Smithtown, NY and clients throughout Suffolk, Nassau, Queens, Brooklyn, Bronx, Richmond, New York, Westchester and Rockland Counties. He concentrates his practice to Elder Law, Medicaid Planning, Medicaid Applications, Estate Planning, Probate, Estate Taxes, and Estate Administration.

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