Medicaid look-back period explained

The Medicaid look-back period is the time before you apply for long-term care coverage when the state checks whether you gave away or sold assets for less than their value. Federal law sets it at 60 months for transfers made on or after February 8, 2006.

Before you move, sell or give away any money or property, talk to your state Medicaid agency or a qualified elder law attorney. This page explains the federal rule. Your state applies it, and Carevo does not assess eligibility or give legal or financial advice.

What the rule says

The law is 42 U.S.C. 1396p(c). If an institutionalized person, or that person's spouse, gives away assets for less than fair market value during the look-back period, the person can lose eligibility for long-term care Medicaid. That covers nursing facility care and comparable institutional or waiver-based care.

The look-back date is counted back from the date the person applies and is institutionalized. The statute sets 36 months as the base period and 60 months for certain trust payments and for transfers made on or after February 8, 2006.

The rule matters because Medicaid is the primary payer for long-term care in the country, according to Medicaid.gov, and Medicare.gov says Medicaid covers nursing home care and personal care that Medicare does not.

How the penalty period works

The penalty is a stretch of time when Medicaid will not pay for long-term care, even if the person otherwise qualifies.

1. Add up the transfers. The statute uses the total, cumulative uncompensated value of all assets transferred during the look-back period.
2. Divide by the state's monthly figure. That total is divided by the average monthly cost to a private patient of nursing facility services in the state (or in the community, if the state elects that option). The result is the number of months of ineligibility.
3. Fractions count. The state may not round down or ignore a fractional month.

Our look-back calculator shows this arithmetic with your numbers. It cannot know your state's monthly figure, so use the number your state Medicaid agency gives you.

In plain terms, if you gave away an amount equal to twice the state's monthly figure, the penalty would be two months. Larger gifts mean longer penalties, and small gifts can add up inside the window.

When the penalty starts

For transfers made on or after February 8, 2006, the penalty period begins on the first day of the month during or after which the assets were transferred. It can instead begin later, on the date the person would otherwise be receiving institutional-level care but for the penalty, if that date is later. That second rule means the penalty clock does not run while the person is not yet eligible and receiving institutional-level care.

What is not penalized

The statute lists exceptions. In summary:

• The home: no penalty applies if the home is transferred to the spouse, to a child under 21, to a blind or disabled child (the statute's detail turns on the state), to a sibling who has an equity interest and lived there at least one year before institutionalization, or to a son or daughter who lived there at least two years and provided care that kept the person at home.
• Transfers to a spouse, or to another person for the sole benefit of the spouse, and some transfers to a disabled child or to a trust solely for an individual under 65 who is disabled.
• Fair value or another purpose: no penalty applies if the person shows the assets were transferred at fair market value or for other valuable consideration, or exclusively for a purpose other than to qualify for medical assistance.
• Assets returned: no penalty applies if all improperly transferred assets have been returned.
• Undue hardship: the state may waive the penalty if denial of eligibility would work an undue hardship under state procedures and federal criteria. Federal notes describe hardship as being deprived of medical care that endangers health or life, or of basic necessities such as food, clothing or shelter. Facilities may file waiver applications on a resident's behalf with consent.

How states apply these exceptions differs, and the details are fact specific. That is a reason to ask the agency or an attorney, not a reason to guess.

What catches people out

• Gifts count. The test in the statute is whether assets were transferred for less than fair market value. The exceptions name particular recipients, and being family is not an exception on its own.
• Spouses. The rule covers transfers by the applicant or the applicant's spouse. If one spouse needs care and the other stays at home, the federal standards for the spouse at home are a separate set. See the spousal protection calculator.
• Timing. A gift is only counted if it falls inside the look-back window, but the penalty clock can start later than the gift, as described above.
• State differences. The statute uses the state's monthly figure, and states handle exceptions and hardship their own way.

What to do first

1. Do not move assets yet. Gather statements for the last 60 months, so you know what the state is likely to ask about.
2. Call your state Medicaid agency and ask how it applies the look-back and what documents it wants. Medicare.gov says to contact your state's Medicaid office.
3. If assets are involved, talk to a qualified elder law attorney before you transfer anything.
4. Learn the neighboring rules: Medicaid spend down, Medicaid and long-term care and does Medicaid pay for assisted living.