The look back period is one of the most misunderstood areas of Medicaid.
It deals with asset transfers and how this could affect the eligibility
of elderly people who are looking for long-term healthcare. To help you
understand how the look-back period works, here is an overview with all
you need to know.
For elderly persons to qualify for nursing home care, they should prove
that they have limited assets and income. While this arrangement was meant
to benefit people with genuine cases, there are few who might see it fit
to give away their money in order to qualify.
That is why the federal government came up with the look-back period, which
is a set of duration prior to when the individual submits an application.
In this period, a Medicaid administering agency conducts a review of all
financial transactions the senior completed. The applicant may be issued
a penalty if the administering agency finds a transaction that violates
look back period rules.
A penalty for violating Medicaid look-back includes making the applicant
ineligible for Medicaid for a certain period. This period is referred
to the penalty period and is determined by the value of transferred assets
divided by daily or monthly rate of nursing care (the penalty divider)
offered in the state within which the applicant resides.
Although it is permitted by the Federal Government to gift money through
gift tax and estate exemption without the need to pay taxes, you should
also understand that Medicaid will not exempt such a transaction from
the look-back period rules.
You should also not fall for the assumption that an irrevocable trust is
not included in a look-back period. A trust falls under legal arrangements
and includes the transfer of assets from the grantor to a third party
(the trustee), who in turn manages the assets on behalf of the trustee.
When made during the look-back period, irrevocable trusts qualify as gifts
and thus violate look back period rules. However, those made before the
look-back period are exempt as they are not considered assets.
To help you answer all questions you might have about look-back period
rules and penalties,
contact us for a comprehensive session with our attorneys who will help you plan better.