The $15,000 figure is the amount of the current gift tax exclusion (for 2018), meaning that any person who gives away $15,000 or less to any one individual in one particular year does not have to report the gift to the IRS, and you can give this amount to as many people as you like. If you give away more than $15,000 to any one person in a single year (other than your spouse), you will have to file a gift tax return. However, this does not necessarily mean you’ll pay a gift tax. You’ll have to pay a tax only if your reportable gifts total more than $11.18 million (2018 figure) during your lifetime.
Many people believe that if they give away an amount equal to the current $15,000 annual gift tax exclusion, this gift will be exempted from MassHealth’s five-year look-back at transfers that could trigger a waiting period for benefits. Nothing could be further from the truth.
The gift tax exclusion is an IRS rule, and this IRS rule has nothing to do with MassHealth’s asset transfer rules. While the $15,000 that you gave to your grandchild this year will be exempt from any gift tax, MassHealth will still count it as a transfer that could make you ineligible for nursing home benefits for a certain amount of time should you apply for them within the next five years. You may be able to argue that the gift was not made to qualify you for MassHealth, but proving that is an uphill battle.
If you think there is a chance you will need MassHealth coverage of long-term care in the foreseeable future, you should review with us your particular situation before starting a gifting plan.