What is the Medicaid Look-Back Period?

The Medicaid look-back period is the timeframe during which Medicaid reviews an applicant’s financial history to determine if any assets were transferred or gifted below fair market value. This review ensures that individuals don’t give away assets to qualify for Medicaid long-term care benefits.

Length of the Look-Back Period

• For nursing home Medicaid, the look-back period is 5 years (60 months).

• For community-based Medicaid (home care services), the look-back period is currently 2–3 months but is expected to rise to 30 months in New York this year.

How Does the Look-Back Period Work?

When you apply for Medicaid, you must provide detailed financial records for the entire look-back period. Medicaid will examine:

• Bank statements

• Real estate transactions

• Retirement account withdrawals

• Gifts or transfers to family, friends, or trusts

If Medicaid finds any improper transfers—assets sold or given away for less than their fair market value—penalties may be imposed.

What Happens if Violations are Found?

Penalty Period

If Medicaid determines that improper transfers occurred during the look-back period, the applicant will face a penalty period during which they are ineligible for Medicaid coverage.

Penalty Formula:
The penalty period is calculated by dividing the total value of the transferred assets by the average monthly cost of nursing home care in the applicant’s state.

Example:

• Transferred Assets: $100,000

• Average Monthly Nursing Home Cost in NY: $14,000

• Penalty Period: $100,000 ÷ $14,000 = ~7 months of ineligibility

During this penalty period, the applicant must pay for care out of pocket.

Planning to Avoid Look-Back Period Penalties

1. Use a Medicaid Trust

• By transferring assets into an irrevocable Medicaid trust well before the look-back period applies, you can protect those assets while ensuring Medicaid eligibility when the time comes.

2. Spend Down Strategically

• Use excess funds for approved expenses, such as home improvements, paying off debts, or purchasing exempt assets like a prepaid funeral plan.

3. Gifts and Timing

• Be mindful of the timing and amount of gifts to avoid triggering penalties. Working with an attorney ensures compliance with Medicaid rules.

4. Seek Professional Guidance Early

• The earlier you start Medicaid planning, the more options you have to protect assets and avoid look-back period penalties.

Why Planning Matters

With the community-based Medicaid look-back period expected to expand to 30 months, proactive planning is more important than ever. This change will make it harder for last-minute transfers to avoid penalties, emphasizing the need to plan ahead.

How Can MLG Help?

At MLG, we specialize in Medicaid planning strategies tailored to your unique needs. Whether it’s setting up a trust, structuring your finances, or navigating the application process, our team is here to guide you every step of the way.

To learn more about the Medicaid look-back period and how to plan effectively, contact MLG and schedule your complimentary consultation today.