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Merlo
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Category: Tax
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My elderly father gifted to me all his assets on 4/28/06, which

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My elderly father gifted to me all his assets on 4/28/06, which amounted to roughly $375,000 (including his home). He has been living with us in our home since November, 2007. We have been dealt with his declining health and he just recently came home from a short-term stay at a nursing home (covered by Medicare). This has made us more aware of the prospects of him having to be placed permanently in a nursing home at some future date. I am very confused about the look-back period for Medicaid benefits. It was our understanding that if the transfers were made prior to 5/1/06, that we would be held to the 3-year look back period. We are now getting conflicting reports that it's now 5 years and that the penalties would be significant. Please advise.
Submitted: 4 years ago.
Category: Tax
Expert:  Merlo replied 4 years ago.

Hello becky,

 

The former law provides a three year look-back for transfers to individuals and a five year look-back for transfers to trusts. The new law provides a five year look back for transfers to individuals as well as trusts. When an application for benefits is made, the reviewing authority has the right to examine all financial transactions of the applicant within the look-back period, which will now be five years for all transactions.

 

The look back period starts on the date of the application for benefits, and is subject to the current look back period of 5 years. Gifts that were made when the old law was in effect are not held to the 3 year look back period, because the look back period does not start until the application for benefits is filed. And it then goes by the current law that is in effect at that time.

 

So if your father does need to apply for Medicaid benefits, he will be subject to the 5 year look back period.

 

 

Thank you becky

 

 

Customer: replied 4 years ago.

So, in other words, any claim made after 4/28/2011 would not be subject to the look back period and anything made prior would be?

Expert:  Merlo replied 4 years ago.

Hello again becky,

 

Even a claim made prior to 4/28/2011 would be subject to the 5 year look back period.

 

The new transfer rules apply to all transfers occurring on or after the date of enactment of the new law. The new law was enacted on February 8, 2006. Transfers made prior to that date would still fall under the 3 year look back period. But any transfer made after that point falls under the new 5 year rule. If your father's assets were not transferred to you until 4/28/06, all of those transfers are subject to the 5 year look back period, because they occurred after the enactment of the new legislation.

 

 

Thank you becky

 

 

Customer: replied 4 years ago.
One more question. I read that North Carolina didn't enact the law until November, 2006. Is that true and if so, does that alter the lookback date for the State of North Carolina?
Expert:  Merlo replied 4 years ago.

Hello again becky,

 

Some states were required to pass their own legislation in order for the law to become effective in their states. However, even though some states had a later effective date for the law, if a Medicaid application is filed after the enactment of the state law, it will still fall under the new transfer rules. So even if NC did not enact the law until November of 2006, the 3 year look back period would only apply to applications filed prior to that time. Applications filed after November 2006 are still subject to the 5 year look back period, except for gifts given prior to February 8, 2006. The delay in state enactment did not push up the date where gifts given prior to that time were exempt from the new rules.

 

 

Thank you becky

 

 

 

Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
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