If you’re thinking about applying for Medicaid to help pay for long-term care in Maryland, you’ll want to understand how gifting assets could affect your eligibility. Medicaid looks closely at financial transactions, especially gifts, made within a specific time frame.
Understanding the look-back period
Medicaid has a five-year “look-back” period. That means if you give away money, property, or other assets within five years of applying, it could delay your eligibility. The state will review your financial records during this time to see if you transferred anything for less than fair market value.
How penalties are calculated
If Medicaid finds you made a gift during the look-back period, they’ll impose a penalty. This penalty comes in the form of a waiting period. You won’t be able to receive Medicaid coverage for long-term care during that time. The length of the penalty depends on the amount of the gift and the average monthly cost of nursing home care in Maryland. For example, if you gifted $30,000 and the average monthly cost is $10,000, you’d face a three-month delay.
Exemptions and exceptions
Not all gifts trigger penalties. Certain transfers are allowed under Maryland law. You can transfer your home to your spouse, a child under 21, or a child with a disability without penalty. Transfers to a sibling with equity interest who lived in the home for at least a year may also be exempt. These rules can help protect your home while planning for long-term care.
Why timing matters
Planning ahead makes a big difference. If you give assets away before the five-year window begins, those transfers won’t affect your Medicaid eligibility. But last-minute gifts can create financial problems. You could end up without Medicaid coverage and no way to pay for care. Taking the time to understand the rules can help you make better choices for your future.