Medicaid Gift Penalty

When someone makes a gift within the look-back period that isn’t subject to an exemption, Medicaid imposes what it calls “Restricted Medicaid Coverage.”

Restricted Medicaid Coverage is a period when Medicaid will not pay for benefits in a long-term care facility because of gifts.
During this time, the person requesting care has to pay for the care without Medicaid's help.
This period only begins after the person has done the spend-down and is otherwise eligible for benefits.
While it is not a criminal penalty, it makes securing care difficult because this penalty only begins after the Medicaid applicant has done the spend-down to reach eligibility.

How is the penalty calculated?

Medicaid takes all the gifts (that aren’t subject to exemption) made within the look-back period (presently 5 years) and divides by the average monthly cost of nursing home care in Ohio. The policy behind this is rather simple—for every month of care the person could have paid for with the gift, it won’t provide benefits. As of 2022, the average monthly cost is $7,453. So if you’ve made non exempt gifts of $37,265 during the look back, your penalty will be 5 months ($37,265/$7,453=5).