The five year “look back” is often misunderstood.
It comes into play only when you are in a Nursing Home, your countable resources are below the Medicaid eligibility limit, and you are applying to Medicaid to pay your nursing home bill.
In determining whether you are eligible, Medicaid “looks back” at five years of your financial information. ALL of your financial information. They are looking for transfers or gifts of money or property that could have been used to pay for the nursing home, had they not been transferred. The most common type of transfer that gets “trapped” in the five year “look back” is a gift from a parent to a child.
If you made transfers during this five year “look back” period, you will not get into trouble. What happens is that Medicaid will impose what is called a “penalty period” – which is a period of time during which Medicaid will not pay for the nursing home. Once the penalty period is over, Medicaid will pay for your nursing home.
However, during the penalty period, you will have to figure out how to pay the Nursing Home. Since you have reduced your resources to a very low level in order to become eligible for Medicaid, usually the person to whom you transferred the money ends up paying – and it usually will cost them significantly more than the amount you transferred to them. That’s why the “look back” and “penalty period” creates an effective remedy for Medicaid.
Can you protect some or all of your life’s savings? Fortunately, the answer is usually yes.
First, it’s essential to know that the five year “look back” applies to Nursing Home Medicaid. There was no “look back” for Community Medicaid until changes were made to New York’s Medicaid program in 2020. These changes will impose a 2 1/2 year “look back” for Community Medicaid services, starting with transfers made beginning October 1, 2020. The look back will apply to Community Medicaid applications that are submitted beginning January 1, 2022. Application submitted before that date will not be subject to the look back. Community Medicaid is discussed in other videos and on our website, but note that the website and especially the videos may not reflect the new Community Medicaid look back rules.
Second, there are strategies available to protect a significant portion of your assets, even if you made transfers within the five year “look back.” Again, these strategies are discussed on our website.