MEDICAID PLANNING AND THE LOOK-BACK PERIOD
01.Core Concepts
• States conduct a review, or “look-back,” to determine whether the individual (or their spouse) transferred assets to another person or party for less than fair market value (FMV). • The “look-back period” is 60 months (5 years). • Transfer of assets can delay the Medicaid eligibility for LTC. • The penalty period is calculated by dividing the value of the property transferred by the average monthly cost of a nursing home in the state. 63 MEDICAID PLANNING AND THE LOOK-BACK PERIOD: EXAMPLE • Charmaine gave her two sons gifts of $15,000 each 12 months ago. This year, Charmaine will enter a nursing home that costs $6,000 per month and will apply for Medicaid benefits. She is a widow and has countable assets of $122,000. • The average monthly cost of nursing home care in her state is $6,000. • The look back period is 60 months, so Charmaine will have a penalty period of five months. • Medicaid eligibility will not begin until countable assets have been depleted down to $2,000. This would take 20 months. • The penalty period will apply after her assets are spent down, resulting in a total of 25 months before Medicaid will begin paying for her care.