TRENTON NJ - Legislation sponsored by Assembly Deputy Republican Leader Nancy F. Muñoz that eliminates penalties for Medicaid applicants who gift small amounts of their money to others in the five years before eligibility is determined was advanced today by the General Assembly.

The bill (A-3760) allows residents to transfer up to $500 per month during the five-year “look-back” period for determining Medicaid eligibility for long-term care services.

“Many people legitimately gift money to family, friends and charities,” said Muñoz, R-Union, Morris and Somerset. “You can’t possibly know what your financial or medical needs will be five years down the road. People should not be penalized for their generosity if the time comes that they require Medicaid to pay for long-term care.

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“Current state law is unclear about gifting money to others,” she continued. “This measure will ensure residents are protected when applying for Medicaid assistance should the need arise.”

The measure clarifies current state Medicaid law. Since many people try to “hide” their assets by transferring them to another individual so they qualify for Medicaid long-term care benefits, federal and state Medicaid law requires a five-year look-back period from the date of a person’s application to determine whether an authorized transfer took place.

Federal law allows states to exclude certain transfers, such as “de minimis” or minor gifts, on the assumption that the person is not giving away the money in an attempt to qualify for future Medicaid benefits. An individual may be denied coverage for unauthorized asset transfers. New Jersey, however, does not have a clear standard regarding such transfers. Those decisions are currently made by county welfare agencies.