Sometimes it can feel like aging is a game. Not the kind of game where vitamins, regular cardio and clean living result in a longer life. It’s more like a game of finite resources, but infinite possibilities. Planning the best you can, for things that are inevitable, while accounting for circumstances that you can’t possibly know.
Where your Medicaid eligibility is concerned, the monetary gifts you make could carry heavy penalties. So when you start looking at long term care, and planning for when you’ll need it, you’ll also need to look at your assets, and what you wish to do with them. If you make a large monetary concession, and within 5 years require long term care through Medicaid, you could run into an issue with eligibility.
Did you pay for your daughters wedding last year? Loan some money to an ailing friend? Would you like to sell your house to your son for below market value? All of these things could have a negative effect on you downstream, if they become subject to the look-back period.
What is the Medicaid “Look-Back” Period?
When you apply for Medicaid, the look-back period is a 5 year window of time in which your monetary activities are scrutinized. If during that time you gave away large sums of money, or sold your house for less than fair market value, you may incur a penalty in the form of time you are ineligible for Medicaid assistance.
The look-back period is meant to prevent applicants from simply giving away their accumulated wealth in order to qualify for Medicaid’s asset limit, which is relatively low.
At the end of the day, Medicaid is meant for people with little to no material wealth… it’s a safety net for those who need it. It’s not meant for people who could have paid for their own care, but instead gave their money away. So when you approach it from that perspective, it makes the idea of a look-back period a little more understandable.
When Does The Look-Back Period Begin?
It begins the day you make your Medicaid application, and goes back 5 years. This is true in every US state except California. They go back only 2.5 years.
Are There Any Exceptions Or Loopholes To The Medicaid Look-Back Period?
There are some exceptions, and you do have options. Though it can be difficult to think about things like this, it’s important to do so, and the earlier you do it the better. In some cases, assets can be transferred to certain parties without affecting eligibility, but it needs to be done the right way. This is where that game of finite resources and infinite possibilities can be won. You can win it with the right players, who know how the game is played.
Resource Planning. It’s What We Do.
The scary unknown is much less scary with trusted advisors by your side, helping you navigate the terrain.
As Certified Medicaid Planners, it’s our job to know the ins and outs of every part of the Medicaid labyrinth. We love demystifying this business for people, and making it approachable. Knowledge is power, and as with any planning for the next phase of your life, the more informed you are the less overwhelming it is.
We’re here to help you, and your family, plan wisely for what comes next. Eldercare Resource Planning. It’s all right there in our name. Make an appointment with us today, and get started toward clarity and peace of mind for your future.