Will Helping your Child Cause you to Lose Medicaid Benefits?

Parents have traditionally helped their adult children or their grandchildren in times of need. If an adult child faces foreclosure, for example, many parents with sufficient resources provide financial assistance to help their child avoid financial devastation. Others make significant gifts to assist grandchildren with their college education costs.

Unfortunately, the Medicaid rules in Maryland provided that any transfer of funds for which no return was received was assumed to be for the purpose of avoiding nursing home costs, assumed to be for the purpose of depleting one’s resources so Medicaid would pay for those nursing home costs.

That presumption was applied even when the person who made the gift to a child or grandchild was in good health with nothing to suggest that such person would require nursing home care any time soon. As chance would have it, however, some people suffer a sudden medical crisis after which they find themselves requiring indefinite nursing home care. If such event occurred within five years of having given funds to a child or grandchild for the reasons discussed above, then such person typically was denied Medicaid benefits for nursing home care for a period of time, even if such person had insufficient resources to pay for such care, and even if the child or grandchild who received the gift no longer had the funds to return to the parent or grandparent.

While competent elder law lawyers often could have the presumption that such gift was for the purpose of qualifying for Medicaid overturned through an appeal hearing, such process was time consuming and costly, and the result was uncertain. This has been a problem for many years.

Now, however, the Maryland State Bar Association (“MSBA”) Elder Law and Disability Rights Section Council has persuaded the Medicaid rule makers in Maryland to modify its regulations, and the Maryland Department of Health and Mental Hygiene has issued a new update to its Medicaid Manual, Manual Release MR-159.

Mr-159 provides updated Medicaid Transfer Penalty Rules, including new rules regarding what types of transfers will no longer constitute gifts subject to the penalty of Medicaid ineligibility. In light of these new rules, gifts to a child to assist in a time of financial crisis, or gifts to enable grandchildren to attend college, especially when such gifts were made before there was any evidence that the gift giver would require imminent nursing home care, likely will not cause Medicaid ineligibility.

Unfortunately, while MR-159 is effective at this time, the Maryland Medicaid regulators have not yet posted MR-159 on the online Medicaid manual, nor have they mailed copies of MR-159 to lawyers who assist clients to obtain Medicaid benefits for nursing home care.

To remedy this lack of transparency, William M. Gatesman, who chairs the website committee of the MSBA Elder Law and Disability Rights Section Council has posted a link to MR-159 in the News and Documents section of the Elder Law and Disability Rights section home page of the Maryland State Bar Association.

You may access MR-159 by clicking HERE.

UPDATE: The official online Maryland Medicaid Manual has now been updated to include MR-159, which you can access by clicking HERE.

If you click either of the links, MR-159 will open in a separate tab or window in your browser.