Medicaid Look-Back Period

What Is The Medicaid Look-Back Period?

If you need nursing home care and are applying for Medicaid in order to have those costs covered, your finances will undergo a period of scrutiny that dates back 60 months (five years). This period of time is referred to as the Medicaid look-back period. In order to be eligible for Medicaid coverage of your nursing home costs, you must meet their requirements for limited income and assets.

Medicaid, a “last-resort” means of paying for nursing home costs, requires that a nursing home resident first use other means of paying for care, before Medicaid begins providing coverage.

Before coverage is provided for nursing home care, Medicaid will need to ensure that your money and assets were not sold below market value, or transferred, in order to avoid paying out-of-pocket costs for a nursing home or other type of facility. Medicaid does this in part by using the “Medicaid look-back period” to determine if there are violations of their rules regarding transfer of assets.

The agency considers, or “looks back” over the previous five years to see if any assets were sold, given away, or transferred for less than their true asset value.

The look-back period begins on the day that you apply for Medicaid. Financial transactions that occurred within the last five years, starting on this date, are subject to scrutiny and analysis by Medicaid.Certain transactions, such as making large financial gifts, or transferring your real estate to another person, may be considered a violation of Medicaid’s rules, and may restrict or delay your eligibility.

Expert Insights

From Jason Milz, Medicare and Social Security Expert

The look-back period only applies to Nursing Home Medicaid and Home and Community Based Services (HCBS) Medicaid Waiver, but not to the Regular Medicaid program. Many beneficiaries over the years have avoided applying for Regular Medicaid due to a lack of understanding on this.

How Does The Medicaid Look-Back Period Work?

The Centers for Medicare & Medicaid Services (CMS) explains that when applying for Medicaid to pay for nursing home care, and other services associated with senior care while in a nursing home, the Medicaid eligibility worker asks if the individual recently gave away any assets, such as vehicles or money. The representative also asks if the person sold property for less than its fair market value at the time of the sale, within the past five years. Transactions which occurred prior to that date are not reviewed or considered.

If a transaction is found that Medicaid classifies as a violation, a Medicaid Penalty Period will begin. During this period of time, you will be ineligible to receive Medicaid payment towards nursing home care. This period typically lasts for as long as the value of the asset could have been used to pay for nursing home care.

The site uses the example that if nursing home care costs $5,000 per month and the individual transferred $10,000 to a third party, then the person is ineligible for Medicaid for two months. The penalty begins the month of the Medicaid application, not the month the individual transferred the property.

The individual then potentially qualifies for Medicaid benefits after the Medicaid look-back penalty ends. That qualification is contingent upon the person not transferring any assets in any months while serving the initial look-back period penalty.

What Happened To The Three Year Medicaid Look-Back Period?

It is true that the Medicaid look-back period was initially three years in most states. The CMS reported on the new regulations, effective February 2006, after the passing of the Deficit Reduction Act (DRA) of 2005.

The DRA brought about several changes to the Medicaid look-back period. California, which still abides by its 30-month look-back period, became the only state not to extend the look-back period from three years to five years.

This potentially affects many people seeking nursing home senior care paid for by Medicaid, perhaps leaving some individuals to consider other means of paying for senior living options.

Another rule that changed is the fact that the Medicaid look-back period previously started with the day you transferred your assets. Now it begins 60 months prior to the date the person applies for Medicaid.

Expert Insights

From Jason Milz, Medicare and Social Security Expert

When applying for Medicaid, most states have experts that can help with the application process. Begin by calling your state’s Health and Human Services (HHS) or Medicaid office. Be sure to have the appropriate documentation with you when you begin the process. Items such as proof of income, bank statements, medical expenses, and rent or mortgage costs will be some of the required items.

Are There Ways To Avoid Medicaid Look-Back Period Penalties?

There are several exceptions to penalties for transferring assets during the Medicaid look-back period:

•  If your transferred asset is a home and you transferred title to your spouse, there is no penalty.
• If your child lived with you for at least two years before you entered the nursing home and that child provided care to you during that period so you could continue living at home, you also avoid the penalty.
• There is no penalty if you have a child under age 21 who is blind or totally and permanently disabled under state-specific guidelines.
• If you transferred the home to your sibling who has an equity interest in that home and lived there for at least a year before you entered a nursing home, there is no penalty.

NOLO points out that other exempt assets include household goods, personal effects, one automobile, and some pre-paid funeral plans.

Five years is a long time, and none of us has a crystal ball. Of course, you hope that you or your loved one won’t need nursing home care in the future. But if it is even a slight possibility, make sure you avoid the kinds of transactions that Medicaid might deem to be violations of their regulations. It can also help to work with a professional Medicaid planner, such  as an elder law attorney.