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Last Updated: March 31, 2025
Medicaid is a healthcare program designed to help individuals with limited income and assets afford needed medical care. Importantly, Medicaid covers long-term healthcare services such as nursing home costs and at-home personal healthcare.
Because Medicaid is intended to benefit those with limited income and assets, there are strict eligibility requirements based on income and asset limits. Although Medicaid is a federal program, it is jointly operated by the federal and state governments. As a result, specific income and asset eligibility requirements vary by state, and you should consult with a Medicaid planning attorney in your area for personalized advice.
How Medicaid Eligibility Works: Income and Asset Limits
As an example, a state may limit Medicaid eligibility for a married couple (when only one spouse is applying) to:
- $3,000.00 per month in taxable income for the couple
- An additional income allowance for the non-applicant spouse
- $4,000.00 in non-exempt assets in the applicant’s name
- An additional $100,000.00 in exempt assets in the non-applicant spouse’s name
Many states also exclude specific types of assets from eligibility consideration, such as a portion of the value of the applicant’s primary residence. As a result, asset planning can be a complex process.
Gifting and Medicaid: What You Need to Know
When people begin to consider Medicaid planning, a natural idea is to gift assets to loved ones — perhaps cash to a soon-to-be-married niece, the family farm to children, or a vehicle to a grandchild.
However, gifting assets can seriously impact your eligibility for Medicaid.
What Is the Medicaid Five-Year Lookback Rule?
Under federal law, Medicaid has a five-year lookback period. This means Medicaid will review any financial transactions made in the five years prior to your application. If it finds gifts or non-exempt transfers that reduce your assets, you may be penalized or delayed in qualifying for benefits.
Are There Any Gift Exceptions That Don’t Affect Medicaid Eligibility?
Yes, but they are very limited. The following asset transfers are exempt from penalties under Medicaid rules:
Transfers to Certain Individuals:
- Your spouse
- Your child who is permanently disabled or blind
- A trust created for the sole benefit of a person who is under 65 and permanently disabled
Transfers of Your Home:
- To your child under 21 years of age
- To your caretaker child who has lived in the home for at least two years prior to your moving to a nursing home and provided care that allowed you to remain at home
- To your sibling who already has an equity interest in the home and has lived there for at least two years prior to your moving into a nursing home
Outside of these narrow exceptions, most gifts will be counted against you in determining Medicaid eligibility.
Plan Ahead with a Massachusetts Medicaid Planning Attorney
Navigating Medicaid eligibility rules and planning for long-term care is a complicated process, especially when it comes to gifts and asset transfers. Because each state has different rules, it’s important to work with a local attorney who can guide you based on your specific situation. Contact The Law Offices of Patricia Bloom-McDonald for a consultation.
Located in Westport, The Law Offices of Patricia Bloom-McDonald proudly serves clients across Massachusetts, including all of Bristol and Norfolk Counties, Plymouth, and the southern coast. Specific areas of service include New Bedford, Fall River, Dartmouth, Acushnet, Taunton, Dighton, Berkley, Swansea, Somerset, Seekonk, Fairhaven, Marion, Raynham, Easton, Mansfield, Attleboro, North Attleborough, Rehoboth, Lakeville, Bridgewater, Rochester, Norton, Assonet, Stoughton, Canton, Sharon, West Bridgewater, Brockton, Whitman, Maynard, Quincy, and Cape Cod. If you cannot come to us, we will come to your home, office, or a convenient location of your choosing. The initial consultation is complimentary.