ALTCS Myth #3: I can preserve my home and property by giving them away.
When faced with the enormous cost of long term care, many people take steps to preserve what they can by giving their savings or property to people close to them. The belief is that the State will pay for their care, rather than exhausting their own savings on those expenses. (In Arizona, the Arizona Long Term Care System (ALTCS) is the State’s Medicaid program for long term care benefits.)
So common is this practice that our government enacted the Five Year Look Back legislation. The assumption is that, if property is given away within five years of application for Medicaid long term care benefits, it was given for the purposes of qualifying financially for the benefits. While there is nothing wrong with spending your savings on your own expenses, it may be a problem if you artificially impoverish yourself by gift your savings or property to someone else. ALTCS penalizes applicants or recipients who gift property or income by delaying coverage of long term care based on the amount gifted. The value of the gift is divided by the average monthly cost of a nursing home in the county where the applicant resides.
As an example, if I gift my home that has $200,000 in equity value, I will delay my eligibility for ALTCS for over 27 months. ($200,000 ÷ $7,366.21/mo for nursing home care (Maricopa Co., effect. 2021) = 27.2 months penalty period)
A delay of this length of time can be devastating when a person is otherwise eligible for ALTCS—meaning out of savings and is in need of long term care. While there are a few limited exceptions to the Five Year Look Back rules, gifting generally results in serious negative consequences.
If you are interested in preserving your property and hard-earned savings, our experienced attorneys can review your options and explore legal alternatives that may be available in your specific situation.