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My Mother would love to pay for my son's college education (he is 10). She wants to gift us the money now to put in a savings account. If she needs to go into a nursing home in the next 5 years and applies for Medicaid, she would incur a "penalty" or ineligibility because of that gift, correct? So, just in case, should we keep that money in an account that can be easily accessed to pay for her care if needed? Also, after 5 years, that gift/money would not be a concern of Medicaid, correct?
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Unfortunately, while the IRS allows anyone to pay directly for someone else's educational or medical expense, Medicaid would regard this as a gift and, as you note, if made within the 60 month before the giver first entered a nursing home (or a hospital, leading to a nursing home stay), impose a penalty period of ineligibility. Putting the funds in a segregated account which she could still access to pay for care would not help. The only way to avoid the penalty is to not be in a nursing home (or a hospital, leading to a nursing home stay) for sixty months after the gift is made or be able to prove that it was not made with any thought of qualifying for Medicaid. If your mother were in her fifties, that might be possible. The older she gets, the less likely it becomes.
Answered on Mar 24th, 2021 at 5:13 AM
This is general information. It cannot substitute for a personal consultation with an attorney. It is not intended to be legal advice or imply an attorney-client relationship.