Does the Medicaid Look-Back Period Apply to Community-Based Medicaid?
Does the Medicaid "look-back" period apply only to nursing home costs? If an individual transfers assets and applies for Medi...Read more
One area that causes a great deal of confusion regarding Medicaid’s look-back period. Unlike Medicare, Medicaid is a means-based program. In other words, you are only eligible for Medicaid if you have very few assets.
The government does not want you to transfer all your assets on Monday in order to qualify for Medicaid on Tuesday. So, it has imposed a penalty on people who transfer assets without receiving fair value in return.
States require Medicaid applicants to disclose all financial transactions in which they were involved during the five years they applied. This five-year period is known as the “look-back period.” The state Medicaid agency then determines whether the Medicaid applicant transferred any assets during this period for less than fair market value.
Any transfer can be scrutinized, no matter how small. There is no exception for charitable giving or gifts to grandchildren. If you have a caregiver, make sure you have a written agreement in place. (If you make an informal payment to a caregiver, it may be considered a transfer for less than fair market value.)
Similarly, loans to family members can trigger a penalty period if there is no written documentation. It is up to the applicant to prove that the transfer was not made in order to qualify for Medicaid.
Transferring assets to certain recipients will not trigger a period of ineligibility even if the transfers occurred during the look-back period. These exempt recipients include the following:
In addition, special exceptions apply to the transfer of a home. For one, the Medicaid applicant's home may be transferred to the individuals above. In addition, the applicant also may freely transfer their home to the following individuals without incurring a transfer penalty:
If the state Medicaid agency determines that an applicant has made a transfer for less than fair market value, it will impose a penalty period. This penalty is a period of time during which the person transferring the assets will not be eligible for Medicaid. The penalty period is determined by dividing the amount transferred by what Medicaid determines to be the average private pay cost of a nursing home in your state.
If you have transferred assets within the past five years and are planning on applying for Medicaid, consult with an attorney. A qualified attorney can find out if there are any steps you can take to prevent incurring a penalty.
Learn more about Medicaid, its asset transfer rules, and how to become eligible.