Medicaid recipients, their caregivers, and people that think they may need Medicaid to cover long-term care expenses in the near future should be aware of Medicaid’s “look back” period if they plan to transfer assets to loved ones. The easiest way to explain the look back period is to provide an example:
Mary needs long-term, nursing home care that she can’t afford. She applies for Medicaid and when she does, Medicaid “looks back” to see if she transferred any assets (house, real estate, etc.) to someone within the past 5 years (the look back period).
Three years ago Mary signed a plot of land worth $100,000 over to her daughter as a gift. The monthly cost of nursing home care in Mary’s state is $5,000 a month. If Mary had not given the $100,000 property to her daughter, the sale of the land would have covered 20 months of care ($100,000 / $5000 = 20 months).
Medicaid now employs the “ineligibility period.” Because Mary gave the land away, land that could have covered her care for 20 months, she is not eligible for Medicaid until 20 months from the date she applied.
This becomes very problematic for families that don’t learn about the look-back period prior to transferring assets and applying for Medicaid to cover long-term care costs. In the above example, had Mary transferred the land to her daughter more than 5 years ago, the look-back period would not apply, Medicaid would cover her long-term care costs the day she applied (assuming she’s eligible otherwise). This may not feel fair when a family is confronted with the unexpected reality, but long-term care costs are exceptionally expensive, and it is an attempt by the government to limit tax payer funded coverage for people that may be trying to game the system by shielding assets. The above example would have been treated differently if Mary had sold the land to her daughter for its true value.
People that think they may need Medicaid coverage for long-term care needs in the coming years should speak with an elder law attorney about these rules, the specifics of which differ from state to state. The research could begin with a call to your State Medicaid Office, found through the Resources by State page.