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Medicaid Look Back Period

Medicaid 5 Year Look Back

How To Avoid Medicaid 5 Year Lookback

Medicaid’s lookback period is the length of time that Medicaid uses to ensure that you are eligible for long-term care Medicaid. In most states, Medicaid examines a person’s financial transactions starting from the date of their application to five years back. If within this period you engaged in any asset transfers and other transactions so that you could meet Medicaid’s asset limit, a penalty period of Medicaid ineligibility will be established.

Your Medicaid plans (see also…The Medicaid Asset Protection Trust) may be derailed if you sold assets below their fair market value, gifted assets, and transferred assets when you could have used those assets to pay for your long-term care as a senior. If you have additional questions regarding medicaid look back period get in touch with an attorney near you.

Why You Should Plan For Medicaid

5 Year Look Back

To avoid the penalty period, you have to make sure that you start making transactions prior to the look-back period. The look-back period in 49 states and D.C is 5 years but in California, it is 30 months. So, if you are a resident of one of the 49 states and you apply for Medicaid on January 1, 2022, your look-back period extends back to December 31, 2016.

That means that any financial transactions you make between January 1, 2022, and December 31, 2016, will be reviewed. But any transactions before December 31, 2016, will not be subject to review.

It is normal to think about protecting your assets and the long-term care Medicaid you will need when you become a senior. Long-term care often involves nursing homes or assisted living residences, which cost a lot of money. But if you qualify for Medicaid, you won’t have to worry about these expenses. However, to qualify for Medicaid, you cannot have assets that have a greater value than Medicaid’s imposed limit.

What Transactions Lead To Medicaid Penalty

Medicaid Look Back Period 7 Years

Medicaid Look Back PeriodPeople that transfer property to relatives and sell assets for less than their market value may face a penalty. This is because these activities can be interpreted as an attempt to sell down in order to qualify for financial assistance.  Some examples of activities that may lead to penalty include:

  • Donating assets to charity
  • Transferring your house to a relative
  • Payments to a personal care assistant
  • Gifting assets to relatives

But sometimes you may unexpectedly get resources or income after the initial look-back period. For example, it is not unusual for people to inherit some money or get substantial investment returns after they have filed for Medicaid. You should talk to an experienced Medicaid planning lawyer if you suddenly come into significant money after applying for long-term care Medicaid.

What About Unintentional Violations Of Look-Back Rules?

Medicaid Lookback

Not all violations of Medicaid rules are intentional. These include:

  • IRS Gift Tax Exemption: Regarding a gift recipient paying taxes the dollar amount the IRS allows is actually higher than Medicaids, You should inquire with a trusted attorney about the exact amounts.
  • Lack of Documentation: You may face a penalty if you do not have sales documentation within the look-back period. This may happen even if the assets were sold for fair market value.
  • Irrevocable trusts: Not all trusts are exempt from Medicaid’s look-back period. Any trust created during the look-back period is considered a gift and may lead to a penalty.
  • Paying family members for long-term care: You have to pay family members with proper legal documentation to avoid penalties.