Ohio Medicaid Eligibility: Should I Give My Assets Away to Qualify for Benefits?
April 25th, 2012
Your Ohio Medicaid eligibility could be jeopardized if you give all your assets away.
When determining eligibility and looking at an applicant’s resources and assets, Medicaid looks at not only the assets and resources the applicant owns at the time of applying, but also any assets or resources they owned in the five years prior to application. If the applicant owned any assets during that five-year period and gave them away, they could be penalized and made ineligible for up to several years.
Our Ohio elder law firm has seen numerous cases in which a person trying to achieve Ohio Medicaid eligibility gave away their home and other assets only to be denied benefits long enough that the cost of long-term care was either out of reach or drained all their remaining resources. Since nursing homes can cost $10,000 per month or more, you can see how this could happen easily.
Heirs will lose the step up in basis on real estate if you give it away prior to death.
Another reason for not giving away all your assets, especially your home in order to qualify for Medicaid benefits is that your heirs are likely to pay significantly more in capital gains tax if they receive real estate from you prior to your death. While this won’t affect your Ohio Medicaid eligibility, it can create a financial hardship for your heirs.
When someone inherits real estate after a loved one’s death, the value of the property is shifted to reflect its current market value. This is called a “step up in basis.” If the heir sells the property, they only pay capital gains tax on the difference between the value at the time of inheritance and the price the property was sold for.
However, if that same person received the property as a gift prior to the loved one’s death and then sold the property, they would pay capital gains taxes on the difference between what the loved one paid for it originally and the sale price. This can mean thousands of dollars more in capital gains taxes. For this reason, our Ohio elder law firm recommends hangingon to your property and preserving the step-up in basis for your heirs.
Achieving Ohio Medicaid Eligibility without Giving Away Assets
If you anticipate needing to qualify for Medicaid, don’t give away your assets. Medicaid eligibility can be achieved and your assets and inheritance preserved if planned for properly. An Ohio elder law firm with experience in estate planning and asset protection, like Gudorf Law Group, can help you create a strategy that protects your assets from Medicaid while still helping you achieve Ohio Medicaid eligibility and giving you access to those assets and any income they generate.
Usually irrevocable trusts, long-term care insurance, and other asset protection tools are used to achieve these goals. It’s best if this plan is put in place at least five years prior to applying for Medicaid, but there are also strategies that can be implemented inside Medicaid’s five-year look-back period.
In Ohio, the elder law firm of Gudorf Law Group, LLC, can assist in protecting your assets from Medicaid while still qualifying you for benefits. Call our Ohio elder law firm at 1-877-483-6730 to schedule a free consultation regarding protection of assets and Ohio Medicaid eligibility.