On behalf of Sayer Regan & Thayer of Sayer Regan & Thayer, LLP posted on Thursday, March 17 , 2022.
By Melissa Green, Esq. Sayer, Regan & Thayer, LLP
Medicaid offers health coverage to millions of Americans (currently, about 76 million people), including low-income adults, elderly adults, children, pregnant women, and those with disabilities. Medicaid is administered by individual states in accordance with federal requirements.
Unlike Medicare, Medicaid is a means-based program, designed only for eligible people with very few assets. When seniors apply for long-term Medicaid, for services provided in a nursing home, their eligibility is based on state-imposed asset and resource limits – which means their assets cannot be greater than the limit. The asset limit in Rhode Island is $4,000 for single people. In other states, such as Massachusetts and Florida, that limit is only $2,000.
The “lookback period” for Medicaid is in place to prevent applicants from giving away assets to family members or selling them below fair market value to get under the asset limit. In 49 states, the lookback period is 60 months, or five years. (California is the only state with a lookback period of 30 months, or two and a half years.)
All asset transfers within the lookback period will be reviewed and the applicant has an affirmative duty to report all gifts made during the lookback period. If gifts have been made during the lookback period, the applicant may be subject to a penalty period. Why? Because if the applicant had not transferred, sold or given away those assets, those assets could have been applied to payment for their long-term care. If the gift or transfer occurred before the lookback period, no penalty is imposed.
Taking a Look at the Lookback Period
The lookback period begins on the date of your Medicaid application for long-term care. For example, if you are a Rhode Island resident and you applied for Medicaid on Jan. 1, 2022, your lookback period would extend back five years to Dec. 31, 2016, a period during which all financial transactions would be subject to review.
Any transfer of funds during the lookback period can and will be scrutinized by Medicaid – it doesn’t matter how small. No exceptions are given for charitable giving or even gifts to grandchildren. And without a written agreement, informal payments to caregivers will also be under scrutiny, as well as loans to family members. As the Medicaid applicant, you hold the burden of proof to show that such transfers were not made so that you could qualify for Medicaid.
There are times where the transferring of assets to certain recipients will NOT trigger an ineligibility period even when occurring during the lookback period. Those exempt recipients include:
- A spouse (or a transfer to another person provided it’s for the benefit of the spouse)
- A trust that benefits a blind or disabled child
- A trust that benefits a disabled person under 65
- Transfer of a home to a child under 21, a child who is blind or disabled, a sibling who lives in the same home, and a caretaker child who has been providing care for the applicant in their home to avoid a nursing home stay.
Have you transferred assets within the last five years? Are you planning to apply for Medicaid soon? Talk to your attorney first to find out how you can avoid incurring a penalty.
Medicaid laws can be very tricky to understand on your own. That’s why you need an attorney on your side who knows this branch of the law inside and out. Medicaid planning is covered under the umbrella of elder law, which also includes crisis planning and management, asset preservation, estate planning, trust planning to avoid probate, long-term care planning, guardianship, and more.
Contact Sayer, Regan & Thayer LLP for Assistance with Medicaid Law
Sayer, Regan and Thayer helps clients navigate complex Medicaid issues and estate plans with a goal of protecting the assets seniors and their families have worked so hard to preserve. Did you know there are exceptions to the five-year lookback rule that may be applied in specific situations to preserve assets, even at the last minute?
Our team understands the complexities of Medicaid and Medicare laws and is backed by vast experience in these matters. If you have questions about the Medicaid lookback period, call us today for your free, no-obligation consultation at 866-378-5836.
These materials have been prepared by SRT for informational purposes only and are not intended and should not be construed as legal advice.