The Medicaid Look-Back Period vs. the Penalty Period

The Medicaid look-back period is very different from the penalty period and as always, the rules are different depending on whether you are seeking Medicaid to cover the cost of homecare versus nursing home care.  

Simply stated, the Medicaid look-back period is the period where asset transfers may impact your eligibility for Medicaid.  The penalty period is the consequence of transferring such assets.  

For nursing home eligibility, the Medicaid look-back period is the sixty (60) month period preceding the date that you enter a nursing home.  For instance, if you enter a nursing home on July 1, 2025 and seek Medicaid eligibility beginning on that date, the Medicaid look-back period is the period beginning on July 1, 2020 and ending on July 1, 2025.  

Contrary to popular public opinion, the Medicaid look-back period is NOT seven (7) years.

From a practical perspective, this means that the local Medicaid office will require that you submit financial records for this entire period for review.  Generally, the local Medicaid office will review all transactions for more than $3,000.00.  If there were transfers during this period, a penalty of ineligibility would be calculated.  

The penalty period is calculated by dividing the total amount of transfers by a regional rate and is always represented in months.  The regional rate differs by County.  By way of example, if you transfer an aggregate of $100,000.00 during the look-back period and the regional rate in your County is approximately $10,000.00, the penalty period will be 10 months ($100,000.00 divided by $10,000.00).  This means that Medicaid will not pay for your nursing home for ten (10) months.

Contrary to what you may hear, Medicaid does not make you retrieve the assets you transferred.  Quite frankly, it’s not their problem.  They will simply deny coverage for the penalty period.  This means that you need to figure out how to pay privately for the nursing home during the penalty period.  This could potentially cause a serious financial issue if those assets cannot be made available for your care.

Note that there is currently no Medicaid look-back period for home care.  

While the penalty period is somewhat unavoidable, the Medicaid look-back period must be contemplated in advance.  Many of the planning techniques we implement as elder law attorneys involve the transfer of assets, usually to a Medicaid Trust.  If you wait too long, you will be caught by the wide cast net of the Medicaid look-back period ultimately resulting in spending your assets for the cost of care.

We are available to assist you in navigating these complex principles.  Please visit our website at www.plantodayfortomorrow.com for more information or feel free to schedule a consultation by contacting us at 914-925-1010 or by e-mail at smd@mfd-law.com.