Understanding The Medicaid Look-Back Period

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It's possible that you've never heard of the Medicaid look-back period. You become so inundated with health, financial, and insurance information, it's difficult to judge what's important. The look-back period is a key Medicaid concept. It becomes relevant as you assess your need for long-term care and plan how to manage the costs. A Medicaid planning attorney helps you develop and implement a strategy. You can deal with this important issue before it jeopardizes your assets at the worst possible time.  You want to consult with a Florida elder law attorney who specializes in Medicaid planning because we can discuss Medicaid-planning strategies that legally and ethically avoid triggering the look-back period.

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What is the Look-Back Period?

The look-back period is a provision of the U. S. Social Security Code, Title XIX, Sec. 1917, Liens, Adjustments and Recoveries, and Transfers of Assets. This section discusses the financial qualifications for Medicaid benefits. It also establishes methods for recovering funds paid out improperly on behalf of recipients. The look-back period addresses the disposition of a beneficiary's personal assets and resources. It's used to determine if funds you used elsewhere could have paid for long-term care.

Medicaid provides financial assistance when an elderly person requires adult care, nursing home care, assisted living, in-home support, and other forms of care. As with all Medicaid benefits, qualification is based on financial need. People who may or may not have understood the look-back process, have given away, sold, or otherwise inadvertently reduced their assets in a way that jeopardizes their access to Medicaid Waiver, ICP, or other Medicaid long-term care benefits. The look-back period provides a framework for examining an applicant's finances for evidence that an improper transfer may have occurred.

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How Does the Look-Back Process Work

When a person seeks assistance, the agency administering the Medicaid program, the Department of Children and Families in Florida, reviews and evaluates their assets and resources. They look back and analyze transactions made up to five years prior to the date of their application for assistance. If the analysis determines that an applicant disposed of their assets, they are subject to penalties - depending on the value of all assets gifted, or transferred for less than fair market value, within that 5-year timespan.

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What Assets or Resource Transactions Violate Medicaid Guidelines?

The person analyzing a potential Medicaid beneficiary's financial transactions searches for the following types of assets and resources.

• Gifts: Cash, personal property (cars, jewelry, artwork, etc.), or real property that was given away as a gift 
• Personal or real property that was sold for less than its fair market value.
• Personal or real property that was transferred to another owner (certain exceptions apply for live-in siblings and children who provided significant care for the Medicaid applicant)
• Annuities (treated as the disposal of an asset for less than fair market value)

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How Do Look-Back Penalties Work

If an applicant gifted, transferred, or sold assets for less than their market value, the value of those improperly disposed assets helps determine the penalty. The cost of care services also plays a role in calculating the penalty.  It's a simple math problem. You calculate the value of the assets disposed of during the look-back period. You divide the total value of the assets by the average monthly cost of nursing home care (this number changes every year and can be found where I update important Medicaid numbers for Florida (labeled as “penalty divisor”). The answer is the penalty. It's the number of months for which a Medicare applicant will have no access to benefits. 

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Penalty Examples: 

• If an applicant improperly disposed of $50,000 in assets, and the average monthly cost of care in his state is $10,000. His penalty period would last for 5 months.   

• If a mother gave her daughter $10,000 each year for 7 years, her cash gifts would total $70,000. As the look-back period examines assets within a five-year time-frame, only $50,000 is subject to penalty and the same penalty period would apply as above.

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Exceptions to Assets and Resources Rules

Certain asset transfers do not cause a penalty to accrue to the person seeking Medicaid care benefits. Here are several of those exceptions.

• A home transferred to a spouse or a child under age 21, or a child who is blind or permanently and totally disabled
• A home transferred to a sibling with an equity interest in the home, and who has been living in the home for at least one year
• A child of the Medicaid applicant, who has lived in the house for two years (known as the child-caregiver exception)
• Assets transferred for the sole benefit of a person's spouse
• If enforcing a penalty would cause undue hardship (note, this is a very high standard to overcome).

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Spousal Impoverishment Provisions

Medicaid Spousal Impoverishment provisions protect some of a couple's resources and assets. They are designed to prevent the impoverishment of a non-institutionalized spouse. Below are the figures for 2020. The allowances change annually. 

• Minimum Monthly Maintenance Needs Allowance: $2,155.00 in Florida and all other states except Alaska ($2,693.75 ) and Hawaii ($2,478.75 )
• Maximum MMNA: $3,216.00 
• Community Spouse Monthly Housing Allowance: 646.50 in Florida 
• Community Spouse Resources:, 128,640.00 in Florida
• Home Equity: 595,000.00 in Florida 

• ALL NUMBERS AS OF 2020, these change every year

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Contact a Medicaid Planning Attorney

Here’s the good news: With proper planning, you can avoid Medicaid look-back penalties and you don’t have to wait five years to apply for Medicaid.  but it takes careful forethought and preparation. Medicaid planning attorneys can work with you both long before the Medicaid application process becomes urgent and also in a crisis setting (mom needs help paying for home health care, ALF care, or nursing home care, now!). We help you understand complex Medicaid laws. Our team will take the time to explain your alternatives and review the pros and cons of all strategies that help you retain more of your assets. Contact us right away to schedule a consultation.