Q. My nephew has autism and some other medical issues. He was in the hospital for several weeks and is now home with my sister and brother-in-law. They want to try home-based care but it is very expensive, and Id like to help them out. Im not in the top 1 percent, but I do all right financially and have no dependents of my own. I dont know if I can afford to give them the maximum amount allowed, but how much could I give my sister without triggering any gift tax reporting?
A. You can gift up to $13,000 a year to any individual without filing a gift tax return. You could gift that amount to your sister, brother-in-law and nephew for a total of $39,000.
Money is nice, but there may be another way you can help out. A woman named Katie Beckett died last month at the age of 34. From age 5 months to 3 years, she was hospitalized and then cleared to go home but her insurance had been exhausted and Medicaid would only pay for her care while in the hospital. Home-based care would cost less than the hospital but it would still be expensive. Her mother advocated for disabled children to receive Medicaid assistance when cared for at home, and in 1982, President Ronald Regan signed what became known as the Katie Beckett Waiver and is now referred to as the Deeming Waiver. Many parents of children with disabilities dont qualify for Supplemental Social Security Income because their income is too high. The Deeming Waiver takes the family income out of the equation and looks at the income/assets of the child. This waiver is helpful to families that make too much to receive financially based Medicaid but need expensive services and care for their special-needs child.
In North Carolina this waiver is covered under the Community Alternatives Program for Children. CAP/C is available to children through age 20. The following is an excerpt from the CAP/C Parent handbook: The Community Alternatives Program for Children is a Medicaid waiver program. It allows children who need the kind of long-term nursing care provided in a nursing home or hospital to stay at home with their family instead of having to stay in the nursing home or hospital. A waiver program is one in which certain Medicaid rules are waived. In other words, some rules that apply to children in a regular Medicaid program do not apply to children in the waiver program. In CAP/C, one example of this is that your family does not have to meet the regular income requirements for Medicaid; only your childs income (if he/she has any) is counted when determining Medicaid eligibility. Another example is that CAP/C can offer you some services and supplies that regular Medicaid cannot. CAP/C participation is only available if your child can be cared for safely in the home and at a lower cost than in a nursing home or hospital. The N.C. Division of Medical Assistance is responsible for approving a childs participation in the CAP/C program. More information can be found at the website: www.ncdhhs.gov/dma/Medicaid/capchildren.htm. The site ToolsMeasureOptionso a list of case workers in N.C. that can help and answer questions. There are three listed in N.C.: RHA Howell, 888-207-7828; Woodys Mom, 919-757-6844; and Jordan Management Group, 877-768-1901.
Ive been told that the approval process can be rather daunting, so time spent helping your sister with the application process could be worth more than any amount of money you are able to gift.
Holly Nicholson is a certified financial planner in Raleigh. She cannot answer every question. Reach her at askholly.com or P.O. Box 99466, Raleigh, NC 27624