Understanding the Medicaid Look-Back Period
Medicaid can help cover the costs of long-term care for those who meet specific income and asset criteria. But if you have too many assets or too much income, you won’t qualify until you’re within the limits.
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Understanding the Medicaid Look-Back Period
Because long-term care is so expensive, some people try to give away their assets to qualify for Medicaid. To prevent this, Medicaid requires applicants to disclose their financial transactions from the past five years (30 months in California).
This five-year window is called the “look-back period.” During this time, Medicaid checks for assets given away or sold for less than market value. If they find such transfers, you’ll face a “penalty period” where you’re ineligible for Medicaid. The penalty period length is calculated by dividing the total value of transferred assets by the average cost of private pay care in your state.
Any asset transfer, no matter how small, can be scrutinized. This includes gifts to family, charitable donations, or informal payments to caregivers. Essentially, you must prove that these transactions were legitimate.
However, some asset transfers won’t trigger a penalty period. These include transfers to:
- Your spouse or someone else for their benefit;
- A trust for a disabled or blind child;
- A trust for a disabled person under 65; and
- Your home, if transferred to:
- A child under 21;
- A blind or disabled child;
- A “caretaker child” who lived with you for at least two years before you needed care and helped delay your move to a facility; and
- A sibling who lived with you for at least one year before you moved to a facility and who has equity in the property.
With proper planning, it’s possible to protect your assets from the transfer penalty. Even if you’ve made asset transfers in the past five years and need to apply for Medicaid soon, there might still be ways to safeguard some of your savings.
Want to know more? Reach out to us to discuss how you can protect your assets and navigate the Medicaid process effectively.
–Kaleem Sikandar, Esq. and Joseph Giambrone, Esq.
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