Can Husky Title 19 recipient in Connecticut gift tax refund to relative?

Question

I have a sister who is already on Husky Title 19 and resides in a nursing home. I hold Power of Attorney for all her financial matters and care. We are considering gifting her Connecticut State income tax refund to a relative as a convenient way to dispense of the refund during the 12-month period allowed for spending it. Are there any legal considerations or restrictions we should be aware of in this situation?

James L. Arrasmith · Answer

When your sister is on Husky Title 19 in Connecticut, any gifts she makes—even small ones—can raise red flags with the Department of Social Services. Although there is a 12-month spend-down period for excess funds like a tax refund, gifting money to a relative may be viewed as a transfer for less than fair market value. That kind of transfer could potentially affect her eligibility or trigger a penalty period, especially if it seems intended to shelter assets. 
 
Even with Power of Attorney, your actions on her behalf must align with Medicaid rules. Medicaid generally expects funds to be spent on the beneficiary’s needs—such as personal items, medical expenses, or improving quality of life in the nursing home. Giving away a refund without a clear benefit to your sister could be scrutinized during future eligibility reviews or if she requires additional Medicaid services. 
 
Before making any gifts, it’s wise to document how the refund was spent and ensure it directly benefits her in some measurable way. If you want to help a relative, consider whether that person is providing services or goods for your sister that the funds would reasonably cover. When in doubt, using the refund for your sister’s needs is the safer route and helps avoid possible penalties down the line.

Q: Can Husky Title 19 recipient in Connecticut gift tax refund to relative?