You need to report a gift over $14k but you don't owe until much higher limits. Same as how people who make very little money have to report income even if it's lower than the lowest tax bracket.
Also, as a reminder, the gifter pays the tax and not the person who received the gift. If someone gifts you an illiquid asset, you aren't forced to go into debt to pay a tax. But the gifter has to figure things out on their end.
Gifts larger than 14k essentially count against your eventual estate tax exclusion.
If you give away $12.06 million on the day before you die (which would be tax-free), then the entirety of your estate is taxed at 40% (both 2022 numbers). If you die without having made any gifts exceeding $14k, then the first $12.06 million of your estate is not taxed at all, and the remainder is taxed at 40%
It's also why means-testing an end of life program that only looks back X number of years is inevitably not actually testing means.
Every rich person has a guy who will tell them how to avoid it legally. Every poor person never had any money in the first place. It only ever hits middle class and upper-low class people who saved money for some of their life and were never told that they had to disburse their assets at X-1 years before they planned to need care and get hit with a huge penalty to their assistance when they inevitably have to move some of their cash around to pay for some of their expensive care.
If you don't want rich people getting public funds for things, you have to be able to look beyond their money games, which is hard, expensive, often purposely sandbagged, and not usually successful.
So just tax them their whole life instead, and let them get back some of what they put in with every other person.
This isn't an income or gains tax. Not all taxes are about money gained. For example, sales tax when you pay $100 isn't negative $8, it's $8.
When gifting large amounts of money, the IRS gets more money on top (so, if you're super rich, don't gift ALL off your money, and leave some aside for tax season).
Also, as a reminder, the gifter pays the tax and not the person who received the gift. If someone gifts you an illiquid asset, you aren't forced to go into debt to pay a tax. But the gifter has to figure things out on their end.