Graduation season brings a lot of joy. Watching a grandchild or child walk across that stage is one of those moments families look forward to for years. And for many grandparents, it also brings the question of how to mark the occasion with a meaningful gift.

Giving to the people you love is a wonderful thing. But if you are at a stage in life where long-term care planning and how to pay for nursing home care is on your radar, it is worth understanding how gifts are treated under Medicaid rules before you write that check or go to the bank and withdraw the fresh $100 bills.

Medicaid is the government program that pays for long-term nursing home care for individuals who meet certain physical and financial requirements. To qualify, an applicant must have limited assets. Once those requirements are met, Medicaid also looks back five (5) years from the date of the Medicaid application at any transfers or gifts during that five-year window. This is known as the five-year lookback period. Gifts made during that window can result in a period of ineligibility for benefits, even if the money is long gone by the time the application is filed.

This is where many families are surprised. A grandparent may have heard that the annual federal gift tax exclusion allows individuals to give up to $19,000.00 per person per year in 2026 without owing gift taxes. That is true for tax purposes. However, Medicaid does not follow the same rules. A gift that is perfectly acceptable under federal tax law can still be considered a disqualifying transfer under Medicaid rules. The two programs operate independently of one another.

This does not mean that giving is off the table. It means that timing and context matter. A grandparent who is healthy and has no foreseeable need for nursing home care in the near future is in a very different position than someone who is already managing health concerns or whose circumstances could change quickly. The five-year lookback only becomes relevant if a Medicaid application is filed within five years of the gift.

There are also circumstances where gifts may be structured or planned in a way that reduces exposure under Medicaid rules. This is exactly the kind of conversation worth having with an elder law attorney before making significant gifts, not after.

Graduation is a natural moment to be generous. A check, a contribution to a 529 plan, help with a first car or first apartment — these are meaningful ways to celebrate a milestone. The goal is simply to make sure that generosity today does not create complications tomorrow.

If you have questions about how gifting fits into your overall plan, or if you would like to understand where you stand before the next family celebration, we are happy to help. Our Open-Door Sessions are free and require no appointment. Stop in anytime during the session and ask your questions.

To find our next Open-Door Session, visit paelderlaw.com or call 1-800-401-4552.

Tammy A. Weber is a Certified Elder Law Attorney and Managing Attorney of Marshall, Parker & Weber, LLC, with offices in Williamsport, Jersey Shore, and Plains. This article is for informational purposes only and does not constitute legal advice.