"What if I give it all away?"
Questions and Answers about the Medicaid Transfer Rules in Connecticut
 (last updated April 1, 2013)

Lisa Nachmias Davis
Davis O'Sullivan & Priest LLC
129 Church Street, Suite 805
New Haven, CT 06510

phone 203-776-4400 fax 203-774-1060



TRANSFEREE LIABILITY IN CT:  (1) recipients of gifts subject to penalty are themselves potentially liable to the State for the donor's cost of care
(2) recipients of gifts, or powers of attorney, are likely exposed to lawsuits from unpaid providers



        Medicaid eligibility is a confusing and complex area of the law.  If you are making a decision, or planning a course of action, because you think it will, or will not, "affect your eligibility for Medicaid" should you require long-term care, you should consult a professional from your own state, who is familiar with the local rules and agencies.  Also keep in mind that the law is always changing and that professionals may not be able to "guarantee" that things will work out as planned.  This article is intended only to make you familiar with some of the basic facts about the ways in which gifts or "transfers" can affect eligibility IN CONNECTICUT.  This article is included because this subject is as much misunderstood as it is widely discussed.  Be aware that the law on transfers may be applied differently in different states.  You should also be aware that the law in this area is changing, that what follows is only an interpretation of the rules, and that state agencies and officials may not necessarily agree with all of the statements in this article.  MAJOR CHANGES HAVE MADE THE MAKING OF GIFTS MUCH MORE DANGEROUS FOR BOTH GIVER AND RECIPIENT.

         If you are reading this article because you are wondering if SOMEONE ELSE, who is elderly, "should make gifts" for Medicaid, please remember that any elder law attorney worthy of the name will view the elderly person as his or her client, and not you -- there is no "should" when it comes to gifts.  Even if a gift won't cause a penalty (such as to a disabled child) that does not mean that it may not still negatively impact the person making the gift.  If you are elderly yourself, be sure the attorney you see makes it clear that YOU are the client, not the thoughtful relative who drove you to the appointment.

        Finally, this article does not represent an endorsement of any particular course of action.  As a matter of principle, I believe that the choices you make concerning your resources and your lifestyle must first take your own feelings, wishes, and comfort level into account before you can even think about whether a particular course of action will "save your family money."  As with planning for death tax savings, planning that takes into account the high cost of long-term care and the requirements of the Medicaid program should not put money saved, before your quality of life. "Giving it all away" can impact your life seriously, whether by affecting Medicaid eligibility, or by precluding the possibility of a reverse mortgage that might keep you cared for at home longer.  You may wish to view my online slide-show about paying for care to consider some of the consequences of being on Medicaid.  This article does not weigh the pros and cons of making gifts, but merely sets forth the Medicaid rules and regulations that will affect you if you do make gifts.


        As a general rule, citizens have the right to decide what happens to their money. That is, you have the right to make gifts.  The only exception is that you are not allowed to make gifts intended to defraud your creditors.  This means, if you run up a big credit card bill, you cannot legally give away your assets deliberately so you can't pay the debt as it comes due.  If you do, the courts can make the people you gave your money to, give it back, because it was given as a "fraudulent transfer." 

        You may have heard of people "giving away" their money "to qualify for Medicaid" if they ever enter a nursing home.  Since the gift is in advance of the nursing home cost, it generally should not be treated as a "fraudulent transfer."  However, in order to discourage people from doing this, the law imposes a "penalty period" of ineligibility for Medicaid that is proportionate to the amount of the transferred property if the transfer is made during something called the "look back" period, whether the transfer is by the person applying for Medicaid or by the person's spouse. The penalty period and the look-back period are not the same.

  • What is the "look back" period?  That is the period of time during which the state "looks back" to see whether you (or your spouse) made a gift.  The Deficit Reduction Act of 2005 changed the "look back" period for gifts on/after 2/8/06 to 5 years.  For gifts prior to that date, 3 years, but 5 years if the gift was made to or from a trust.  Gifts by an institutionalized person already eligible for Medicaid are also "looked back" at. 



Post 2/8/06 gift 5 years + 1 day before applying for Medicaid

OUTSIDE the "look-back" period; has no effect on eligibility



Post 2/8/06 gift 4 years + 364 days before applying for Medicaid

INSIDE the "look back" period; affects eligibility.  Now you have to determine the resulting "penalty period."

  • What is the "penalty period"?  The "penalty period" is the period of disqualification from Medicaid benefits for institutional or long-term home care which is imposed if a "transfer" is made during the "look back" period.  The "penalty period" is not the same as the look-back period.  The length of the penalty period is calculated by dividing the amount transferred, less any value received, by a figure known as the "average monthly cost of care" in effect during the month of application.  As of 7/1/09, the "average monthly cost of care" figure in Connecticut is $9,959.00. Prior to 2/8/06, the "penalty period" began to run the 1st day of the month you made the gift.  For gifts on/after 2/8/06, the penalty period does not begin to run until you are receiving care that would entitle you to Medicaid if you are otherwise qualified and have applied and would qualify but for the gift.  The same computation applies if the person is receiving care at home or in a skilled nursing facility.


Gift of 111,830* made after 2/8/06 and within 5 years of applying for Medicaid.

7/1/2010:  average monthly cost of care in CT = 11,183

(1) Made within the "look-back" period, so the gift affects eligibility. 
(2) The gift results in a "penalty period" of 10 months. 
(3) If the gifts was made before 2/8/06, the 10 months is over - no penalty.
(4) If the gift was made on/after
2/8/06, the 10 months does not START until you are "otherwise eligible" based on an "application."


Gift of $1,118,300 made within 5 years of applying for Medicaid (if made on/after 2/8/06) or within 3 years (if made earlier).

(1) Made within the "look-back" period, so the gift affects eligibility. 
(2) The gift results in a "penalty period" of 100 months, or 8.33 years. 
(3) The person making the gift is NOT ELIGIBLE for Medicaid until 8.33 years has passed.


Gift of $1,118,300 made 5 years + 1 day before applying for Medicaid (if made on/after 2/8/06)

Outside the "look-back" period, so the gift does not affect eligibility.

For gifts prior to 2/8/06:  the "penalty period" used to start the FIRST DAY of the month in which a transfer is made, so a gift of $11,183 on January 1, 2006 means that by February 1, 2006 the gift no longer had any effect on eligibility.  Since more than 3 years has now passed since February 8, 2006, however, we are no longer concerned about how penalties would have been imposed on gifts prior to February 8, 2006

For gifts on/after 2/8/06:  if the same person had made the $11,183 gift on March 1, 2008, then even if (s)he applied for benefits as late as 3/1/2013, (s)he might still have a one-month penalty period and might be denied coverage for one month.

  • Is a penalty imposed on every transfer?  NO.  Certain transfers are "exempt" or disregarded.  These include (but there are others):
  • Transfer of home to a child who for 2 years lived with and provided care to applicant that kept him/her out of a nursing home. 
  • Transfer of assets to a child or other person who for 2 years lived with and provided care to applicant that kept him/her out of a nursing home, to the tune of the average nursing home cost times the number of months of care (per Connecticut regulation).
  • Transfers to or for the sole benefit of a spouse.
  • Transfers to or for the sole benefit of, or in special trusts ("OBRA '93 Trusts") for disabled persons under 65.
  • Transfers to a disabled child.
  • Transfer to sibling who lived in home for 1+ year and had ownership interest in the home.
  • Certain other exceptions apply -- but you should consult an attorney about proving that ANY of the exceptions apply.
  • What is considered a transfer?  Some things that you may not think of as transfers by you, will be treated as transfers and, if made within a look-back period, will affect your eligibility for Medicaid.
  • Any transfer made by your spouse before you are awarded Medicaid is treated the same as if it were made by you.  (Special rules apply if both of you require long-term care.)
  • Transfers made on behalf of either of you by a conservator, under power of attorney, etc., are treated as if made by you.
  • Withdrawals by a joint account-holder from a joint bank account.
  • Putting the title to your house into joint names with someone else.
  • Buying certain kinds of annuities -- the law has become complex in this area, so some purchases are OK but only an elder law attorney would be able to explain this thoroughly.
  • Lending money if the promissory note does not meet certain criteria or if you forgive the loan in your will.
  • Failure to make the election to take your "statutory share" of the estate of your spouse -- to "elect against the will" -- if (s)he dies before you, may be a transfer.
  • Distribution from a living trust established by you or your spouse upon the death of either of you, if the other person requires long-term care.
  • Disclaimer of an inheritance is a transfer.
  • A gift in a will is not a transfer.
  • A gift (of anything except your home or proceeds of a reverse mortgage or line of credit) by your spouse at any time after you are awarded Medicaid benefits, is not a transfer (at least in CT).
  • Buying a "life use" if you don't live in the property for at least a year.
  • Selling something below-market -- like selling your home at a discount.
  • Giving away your home and retaining a life use.
  • Is it against the law to make a transfer?  No.  Some years back, the "Granny goes to jail" law suggested this could happen, but it was replaced by the "Granny's lawyer goes to jail" law that made it a crime for an individual (for example an attorney) to advise an individual, for a fee, to make a transfer of assets in order to qualify for Medicaid if a penalty period is imposed on the transfer.  However, during the Clinton administration, the Justice Department publicly stated that it regarded the law as unconstitutional and will not enforce it, and a New York court reached the same conclusion.  We haven't heard of any attempts to revive that law.

  • What if the money runs out during a penalty period?  The law prohibits a nursing home from discharging a person unless there is an appropriate plan of care for that person.  In other words, it is not legal to "dump" a nursing home patient by the curb whether or not (s)he can pay for the room and whether or not Medicaid is paying.  See http://www.CTElderLaw.org for more on nursing home residents' rights.  Nor does Connecticut have any law requiring a person's children to foot the bill for a parent's care or to take the parent back into the child's home.  SO FAR!  On the other hand, if you get sent to a hospital, the nursing home may not have to take you back if you are away more than 15 days, so you might wind up somewhere else.  In addition, by law, states must have rules to prevent "undue hardship" to an applicant for Medicaid who is ineligible for benefits because of a transfer.  State regulations say that the Department of Social Services may require you to show that:
  • The nursing home has threatened to evict you (the person who made the transfer).
  • You and your spouse (if not in a nursing home) do not have assets available to pay the nursing home due to circumstances beyond your control.
  • You sign an "assignment of rights" so that the State can take legal action to get funds you are entitled to.  This may include: (1) going to court to get a support order against your spouse; or (2) going to probate court to argue that someone using your power of attorney took your money.
  • Can anything else bad happen to me or the person to whom I make the gift, because I made the gift?  YES.  Under a law enacted June 8, 2005, making a gift within the "look-back" period creates a debt owed to the State of Connecticut by the transferor and the transferee, in the amount of Medical Assistance provided, not to exceed the amount of the gift.  Example:  Fit, active and healthy 75-year-old Grandma gives granddaughter $20,000 for tuition in July, 2005.  In December, 2007, Grandma has a stroke and enters a nursing home.  Her money runs out in June 2008 and she applies for Medicaid.  The penalty period expired years ago and her application is approved.  BUT, the State knows she has made a $20,000 gift during the prior three years, and in August 2008 sends the granddaughter (who has since graduated and is trying to pay off her other student loans) a notice that she owes the State $20,000.  Nice?  What else might happen?  COMMON SITUATION:  If your relative signed as "responsible party" on the nursing home admissions contract, the facility might sue him or her for your nursing home bill if it isn't paid by Medicaid.  Believe it.  It does and will happen.  COMING SOON:  The nursing home industry is pushing for new laws that will allow them to sue the relatives directly, even if they did nothing wrong.

  • What if I made a transfer and can't get the money back?  What can I do?  Consult an attorney.  The stakes are high.  The person who signs the nursing home admissions agreement may get sued.  However, many gifts have quite innocent explanations, were made for reasons that had nothing to do with Medicaid planning or were made to compensate someone for services provided, or low rent, or some other quite good reason. If you made a gift when living independently, within your means, in reasonably good health, for a darn good reason you can prove, even a major gift may ultimately get through if worst comes to the worst and you require long-term care and seek Medicaid assistance.  But it's serious business and worth getting professional help to argue your case.  By the same token, don't let the law paralyze you.  Again -- if you act prudently, within your means, in light of your anticipated health needs, and make a gift for a good reason, NOT IN ORDER TO QUALIFY FOR MEDICAID, you should not be "punished."

  • Can I give money away to my kids and make sure I can still have access to it if I need it?  Do you know the old saying "you cannot have your cake and eat it too"?  There are many ways a lawyer can help to reduce the risk that your kids will still have the money you give them if and when you need it, and that they will still choose to use it for your wants and needs, if and when you want them to.  But there are no guarantees.   There is no free lunch.  If you choose to part with your estate early in order to "beat the look-back," be aware of the risks. It's your choice -- you can choose to take that risk if you care a lot about passing on your estate.  Your children may have needs and you may want to help. You may not want your life savings to get used up on nursing home expenses when you worked so hard to save something for your family.  But there is no free lunch-- no absolute guarantee that the money will be there when you want it -- at least not if you want to be sure that the funds won't still be counted as available to you when you apply for Medicaid.  I discuss some of the options, and the pros and cons, in a different article, "Protecting Assets."




Lisa Nachmias Davis
Davis O'Sullivan & Priest LLC
129 Church Street, Suite 805
New Haven, CT 06510

phone 203-776-4400 fax 203-774-1060

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