What is the five-year “look-back” and how does it work?
By Kim Boyer
When applying for Medicaid, the state will “look back” to see if any gifts have been made. The state will not let you just give away your property or your money to qualify for Medicaid. Any gifts or transfers for less than fair market value that are made during the “look back” period may cause a delay in Medicaid eligibility.
On February 8, 2006, the Deficit Reduction Act (“DRA”) was enacted, changing Medicaid rules. All transfers after February 8, 2006 are subject to a 5-year look-back period. If the gifts were made outside the look-back period, then there is no disqualification period. If there have been any gifts in the look-back period, then Medicaid will not pay for nursing home care during the disqualification period. The disqualification period does not begin until the individual moves to the nursing home and the person would otherwise be eligible for Medicaid. If the assets are returned or partially returned, the disqualification period can be shortened or eliminated accordingly.
At the time of application, the Medicaid agency combines all the gifts that fall within the “look back” period and divides that amount by a divisor. The result is the number of months the applicant is ineligible for Medicaid benefits. The divisor is the average monthly cost for nursing home care, as determined by the State of Nevada. The average cost of nursing home care in the State of Nevada is determined to be $7,200.00 per month (2013 figure). For example, if the applicant transfers assets worth $72,000.00, that amount is divided by $7,200.00/month, and results in a 10-month period of ineligibility. A gift of less than $7,200.00 results in a partial month of ineligibility.
Here are some case scenarios to illustrate application of these rules. The question is: “When will the following individuals become eligible for Medicaid benefits, assuming all other Medicaid eligibility rules are met?”
CASE 1: In January of 2007, Gordon gave his son $500,000.00. Gordon enters a nursing home in March of 2013 and applies for Medicaid benefits. Answer: Gordon’s gift is not in the look-back period.
CASE 2: In July 2010, Harold gives his daughter $72,000.00. Harold enters a nursing home in January of 2013 and applies for Medicaid benefits. Answer: The gift is in the look-back period. The disqualification period will be calculated as 10 months (i.e., $72,000 divided by $7,200 equals 10 months). The disqualification period begins running January of 2013.
Obviously, the gifting rules can be complicated at times, and there are various exceptions to the gifting and transfer rules. The penalty divisor also changes periodically. As always, it is important to consult a knowledgeable elder law attorney for advice.
Disclaimer: Information provided as a service of Kim Boyer, Certified Elder Law Attorney, updated as of 01/01/13. It does not constitute legal advice. For specific questions you should consult a qualified attorney.