Don’t be caught by the Medicaid five-year ‘look-back’ period

You may already have decided that you want to use Medicaid benefits to pay for your nursing home care when the time comes. To qualify for Medicaid benefits in Georgia, you must have a minimal amount of assets and income. It can be tempting to try to just give away your assets to loved ones in order to meet the low income and asset threshold for qualifying for Medicaid. However, it is important to note that Medicaid has a five-year “look-back” period that could make it more difficult for you to pay for nursing home care when you need it.

What is the five-year “look-back” period?

If a person gives away assets or sells them for less than their fair market value in the five years prior to applying for Medicaid, with some exceptions, these gifts will fall under Medicaid’s five-year “look-back” period, and the Medicaid applicant will be penalized by extending the time period that must pass before they can be eligible for Medicaid benefits. This means that a person may have to wait longer before being able to use Medicaid benefits to pay for nursing home care. It is important to note that this penalty starts running on the date of the application for benefits, not on the date the gift or sale was made.

Are there exceptions to the “look-back” period?

However, there are some exceptions to the five-year “look-back” period. For example, if your adult child resided in your home and cared for you for at least two years before you submitted your Medicaid application, delaying your need for nursing home care, you may be able to gift that child the house for free without being penalized.

In addition, if you create a trust for a child who is blind or meets the Social Security’s definition of disability, you can gift them money through the trust and that gift will not be penalized. Also, transfers between spouses will not be penalized, as the total assets of both spouses are considered when one spouse submits an application for Medicaid benefits.

Ultimately, this is only a brief overview of Medicaid’s five-year “look-back” period. This post does not contain legal advice, so those who have questions about Medicaid planning will want to seek professional advice on the matter.