As a result of the Deficit Reduction Act of 2005, and in the case of an individual - no community spouse, the most popular Medicaid Crisis Plan involves a Gifting/Short-Term Medicaid Compliant Annuity (which has also been referred to a “Half-A-Loaf Plan”).
Within such a plan, the potential Medicaid applicant/recipient is advised to gift away approximately 1/2 of his or her spend-down amount, while using the other half to fund a Short-Term Medicaid Compliant Annuity. With the gift amount creating an ineligibility period for the Medicaid applicant/recipient, the purpose of the Short-Term Medicaid Compliant Annuity is to provide almost sufficient funding in which to pay the respective nursing home bill during the divestment penalty period.
As a result of the gift or gifts, if the Medicaid applicant/recipient/donor gave away more than $12,000.00 to any one donee in any one calendar year, the individual must report the gift amount to the Internal Revenue Service on a Form 709, and pay any respective gift tax.
Gifts include money, property, including the use of property without expecting to receive something of equal value in return. Also, if the donor sells something at less than its market value, or make an interest free, or reduced interest loan, it may be considered making a gift.
