Page 235

17.2.6.1.3 Unexpected Need An unexpected need is evaluated by considering the institutionalized person’s health and age at the time of the divestment. If the institutionalized person did not anticipate the need for long-term care services in the next five years and divested, it is an allowed divestment and doesn’t result in a penalty period. Example 3 Gerard had no health issues, was gainfully employed, and was 50 years old when he gave $50,000 to his daughter. Two years later, Gerard experienced a heart attack that caused him to need long-term care services for the rest of his life. When he gave the $50,000 to his daughter, Gerard was not expected to have set aside resources for five years of long-term care. This gift is an allowed divestment and doesn’t result in a penalty period. 17.2.6.1.4 Pattern of Gifting If the institutionalized person or their spouse had a pattern of gifting money, such as to family members or charities, prior to the look back period, similar divestments during the look back period are allowed and don’t result in a penalty period if both of the following conditions are met: • There is no significant gap in the years or occasions the gifts occurred. • The total value of yearly gifts given as part of a pattern don’t exceed 15% of the individual or couple’s annual gross income in the year the gifts were given. If it is determined that the total value of yearly gifts given as part of a clearly established pattern of gifting exceeded 15% of the individual or couple’s annual gross income for that year, the divested amount is the gifted amount in excess of 15% of their annual gross income. This allowed divestment is not limited to gifts made on traditional gift-giving occasions such as birthdays, graduations, and weddings. It can include a pattern of gifting to assist family members with educational or vocational goals. Example 4 Jacques is applying for long-term care. He has five grandchildren. Two of Jacques’s grandchildren graduated during his look back period, and he gave them each $1,000 as graduation gifts. The amounts of those graduation gifts did not exceed 15% of his income in the years they were given. Jacques can also show that, prior to the look back period, he gave similar gifts to two of his other grandchildren when they graduated from high school. He has therefore shown that the gifts given to his grandchildren during the look back period were part of a pattern of gifting. The gifts are an allowed divestment and don’t result in a penalty period. Example 5 Brittany is applying for long-term care in June 2026. She reports that, during her lookback period, she made monthly recurring gifts to several charities. Brittany provides documentation showing these gifts began prior to her lookback period and were part of an established pattern of gifting.

From June 2022 to May 2023 (the second year of her lookback period), her gifts exceeded 15% of her gross income by $1,000. From June 2023 to May 2024 (the third year of her lookback period), her gifts exceeded 15% of her gross income by $500. The total divested amount is $1,500. 17.2.6.1.5 Resources Spent on Support of Dependent Relatives The institutionalized person or their spouse’s support of dependent relatives who were living with them at the time of the transfer is an allowed divestment and doesn’t result in a penalty period when either of the following conditions are met: • The institutionalized person or their spouse claims the relative as a dependent for IRS tax purposes.