Gifts made within the last 3 years or 5 years

The veteran pension and Medicaid qualification rules penalize, respectively, such gifts by delaying eligibility. Making even a small mistake can prove very costly down the road. Good counsel here, preferably from legal counsel, is needed.

The 3-year lookback period is for the Veteran Pension Benefit claim, and the 5-year period is for Medicaid applicants. These are two excellent long-term benefit programs that penalize prior gifts by the applicant. The rationale for both is that since the benefits are need-based, the applicant’s gifts made prior to application should be considered as countable assets as if never made. Since such gifts cannot always be returned intact, and both programs have special rules concerning how that can be done, with consequences not always what you’d expect, even the possibility of such gifts needs to be closely examined.

The penalty for applying for either of these benefits with such a gift having been made within the applicable lookback window will be denial of the claim until the disallowed gift has been “cured” under their rules. Never assume that an undeclared gift will not be discovered, despite often-heard opinions to the contrary, because both agencies are closely tied to the IRS and such crossover information can occur at any time. Such a discovery will mean not only immediate disqualification, but will be accompanied by a demand for repayment of all prior benefit payments.

If gifts were made outside the appropriate window, it is considered as if the gift had never been made.

If you are not yet clear on whether you’ll be applying for one of these benefits, act as though you’ll one day apply for Medicaid, since its lookback period is longer.

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Getting Started:

At this preliminary stage, your focus should be entirely on whether such gifts have, in fact, already been made. If not, your focus will naturally turn on whether perhaps such gifts should be made, and if so, when and in what amounts.

Your greatest professional asset here is an attorney with expertise in either or both VA Benefits and Medicaid eligibility. They can consult with you on which actions will benefit your situation most now, while not hindering any future action to claim benefits.

Some Insights:

Be wary of those who are not attorneys stating that they support the “preparation” of applications. A type of expertise has surfaced that involves only application-preparation, and perhaps application-processing, expertise. Beware of this limited expertise claim. While certainly important, of equal importance is your advisor’s competence in guiding your actions prior to making the application. Think of it as effective grooming before having an important picture taken.

Dive In:

Your state Medicaid Manual (available online) under Gifts