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The majority of nursing home residents receive some Medicaid assistance. When considering nursing home care or other senior living decisions, knowing about the Medicaid look-back period helps reduce the possibility of penalties or disqualification from Medicaid for a period of time.
Learn about the Medicaid look-back period and how it potentially affects you or your loved one considering senior care or senior living options.
The Medicaid look back period likely seems confusing for some individuals, particularly with changes made in recent years.
If you or your family member needs nursing home care, the individual must meet requirements for limited income and assets to qualify for Medicaid coverage for nursing home costs. 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.
Medicaid helps make sure money and assets are not simply transferred to avoid paying out-of-pocket when a person has the means to pay at least some of the costs associated with nursing home senior care and senior living services. Medicaid does this in part by using the “Medicaid look-back period” to determine if there are violations of rules regarding transfer of assets.
The agency considers or “Looks back” over the previous five years to see if any assets were sold for less than true asset value, given away or otherwise transferred within the same time period when determining eligibility for Medicaid coverage and any violations that restrict or delay eligibility.
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.
This transferring of assets usually results in a penalty, meaning that the person seeking senior living at a nursing home is ineligible for Medicaid, “For as long as the value of the asset should have been used” to pay for the nursing home care.
The site uses the example that if nursing home care costs $5,000 per month and the individual transferred $10,000, 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.
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 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.
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 enter 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. If you have a child under age 21 who is blind or totally and permanently disabled under state-specific guidelines or if you transferred the home to your sibling who has an equity interest in that home and lived there for at least a year prior to your entering 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.
When considering nursing home senior care and senior living, make sure you avoid improper transfer of assets and know other guidelines of the Medicaid look-back period.
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