Co-Authored by Joanna C. Feldman, Esq.
The short answer is no, but let’s go further.
Medicaid applications to cover expenses in a nursing home are subject to the five-year look back period. This means that any gifts, uncompensated transfers, or transfers for less than fair market value made by the applicant within the five years prior to seeking Medicaid benefits will likely result in a penalty period during which Medicaid will not cover the nursing home costs. The penalty period is calculated by dividing the amount transferred by Medicaid’s rate established for calculating the penalty period. (The rate varies depending on the location of the facility, and in 2019 averages approximately $12,000.00).
Example: In 2017, Jill gifted $100,000.00 to her daughter. Two years later, in 2019, Jill went into a nursing home for long-term care and sought Medicaid benefits. Using the rate established for 2019, the $100,000.00 gift would result in a penalty period of approximately eight to nine months ($100,000.00 divided by the regional rate).
In such a hypothetical, we are often asked whether the penalty period could be pro-rated because Jill went into the nursing home two years after the gift was made – i.e., only three years of the five-year lookback period remained. To be more specific, the question is whether the penalty period could be based on 3/5 of the $100,000.00 gift, or $60,000.00, which would result in a shorter penalty period.
The penalty period will not be reduced, or pro-rated, based on the number of years remaining in the five-year lookback period. The penalty period is based on the total gifts or uncompensated transfers made within the previous five years, regardless of how many years have passed before the applicant seeks Medicaid for care in a nursing home.