Understanding the Five-Year Look-Back for Medicaid Eligibility

We previously discussed some of the common misconceptions clients have about Medicaid planning. One area we mentioned merits further discussion: the individual net value maximum and the five-year look-back period for Medicaid eligibility. Read on for an explanation of the look-back, and reach out to a dedicated West Palm Beach Medicaid planning and elder law attorney for help.

The Medicaid Five-Year Look-Back Period

In order to qualify for Medicaid, an applicant must fall below a certain net worth and income threshold. Applicants who have too many assets to qualify may believe that they can perform an end-run around the threshold requirement by selling off their assets in the years leading up to retirement or some other planned date, expecting to qualify for Medicaid at that time. In reviewing an application for Medicaid coverage, however, the caseworker will review all transactions by the applicants over the prior five years in order to assess eligibility. This review is known as the “look-back period.”

The Medicaid caseworker will identify any assets, including money, stocks, property, etc., that were given away or transferred for less than fair market value. If the caseworker identifies transfers without value or gifts during that period, they will assess a penalty which delays the applicant’s Medicaid eligibility. The point of the look-back is to prevent applicants from siphoning off assets to friends and family in order to qualify for Medicaid eligibility. The state wants to limit Medicaid to those who are truly in need.

Which Medicaid Programs Have a Look-Back?

There are a variety of programs available under the umbrella of Medicaid, and not all involve a look-back period. The programs involving elderly care and benefits for long-term care, which are the focus of this article, do employ a look-back period for Medicaid coverage. Other programs, such as those for pregnant mothers and newborn children, may not employ a look-back.

How is the Medicaid Penalty Period Calculated in Florida?

The philosophy behind the look-back penalty is that the money given away should have been used to care for the elder. So, the penalty delays Medicaid eligibility by asking how many months of care that amount given away could have provided. For elder care, Florida’s Department of Children and Families (DCF) will assess a time period by dividing the total value of assets given away by the average monthly private pay nursing home facility rate at the time of the Medicaid application (the penalty divisor). Florida’s current penalty divisor is $9,171. 

For example, if you gave away $30,000 to your son three years before your application, and the caseworker finds no other gifts, then your time penalty will be calculated by dividing $30,000 by $9,171. The result is a bit over three. Florida rounds up, so your penalty will be four months, meaning you will have to wait four months before receiving Medicaid benefits (assuming you otherwise qualify).

There are Ways to Appropriately Plan for Medicaid eligibility

A skilled West Palm Beach special needs planning attorney can help you and your family plan appropriately to maximize your chances for needs-based eligibility and can also identify strategies alternative to gifting that may be able to expedite approval without triggering the five-year look back disclosure and waiting penalty. If you are in need of an experienced and compassionate Florida Medicaid planning and elder law attorney, contact the seasoned, dedicated, and effective West Palm Beach trust and estates attorneys Shalloway & Shalloway at 561-686-6200.