How Does The Medicaid Look
One area that causes a lot of confusion with regard to Medicaid is the look-back period. Medicaid, unlike Medicare, is a means-based program, which means that you are only eligible for it if you have very few assets. The government does not want you to transfer all your assets on Monday in order to qualify for Medicaid on Tuesday, so it has imposed a penalty on people who transfer assets without receiving fair value in return.
In order to identify who has transferred assets, states require a person applying for Medicaid to disclose all financial transactions he or she was involved in during the five years before the Medicaid application. This five-year period is known as the “look-back period.” The state Medicaid agency then determines whether the Medicaid applicant transferred any assets for less than fair market value during this period.
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Any transfer can be scrutinized, no matter how small. There is no exception for charitable giving or gifts to grandchildren. Informal payments to a caregiver may be considered a transfer for less than fair market value if there is no . Similarly, loans to family members can trigger a penalty period if there is no written documentation. The burden of proof is on the Medicaid applicant to prove that the transfer was not made in order to qualify for Medicaid.
- A trust for the sole benefit of a blind or disabled child
- A trust for the sole benefit of a disabled individual under age 65 .
What Does This Mean For Medicaid Recipients
Medicaid recipients must be clear on the Medicaid look-back period, what exceptions exist, and how an elder law professional can help them. Planning ahead can mean avoiding penalties and getting proper financial help and support if you need a nursing home or other long-term care options. However, not everyone understands the look-back period and its significance, so its important to work with an experienced Elder Law attorney.
Does Medicaid Have A 5
Atty. Tom Olsen: We know from experience that what most people know about Medicaid and maybe the only thing they know about Medicaid is that Medicaid has a five-year look-back period, so they throw up their hands and say, nothing we could do. If we’re going to do something, I should have done it five years ago. What most people don’t know is that there are Medicaid-compliant tools that work around that five-year look-back period.
Atty. Robert Hidock: There are, and I equate it to the IRS, Tom. Everybody has their tax bill, but no one pays their full tax assessment. They have legal deductions that will allow them to pay the lowest amount possible, and in the Medicaid world, we have legal, Medicaid-compliant tools that will protect as most assets as possible with only a minimal amount of money going into a nursing home.
Atty. Olsen: Folks, we just want you to know that as you’re out there in the community, talking to family, friends, neighbors, co-workers, and you get the word that somebody’s going into a nursing home, and there goes all their money, nothing they can do, all they’ve worked for all their life $10,000 or $12,000 a month, it’s not going to last long. Well, we want you to know that the Olsen Law Group in Orlando, we can assist you throughout the state of Florida to protect those assets, keep them free from Medicaid, nursing home claims, and that includes your home, your beach condo, your vacation home, your cash in the bank, your IRAs, you name it.
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Medicaid Penalty Hardship Waiver
Under the DRA, a Medicaid applicant can apply for a hardship waiver where it can be proven that the medicaid applicant cannot get their assets returned to them and the imposition of the penalty will cause substantial hardship that will prevent them from being able to cloth, feed or shelter themselves. This is a very high burden and likely to be rejected by Medicaid except under clear hardship circumstances.
What Happened To The Three Year Medicaid Look Back Period
It is true that the Medicaid look-back period was initially three years in most states. The CMS reported on the new regulations, effective February 2006, after the passing of the Deficit Reduction Act of 2005.
The DRA brought about several changes to the Medicaid look-back period. California, which still abides by its 30-month look-back period, became the only state not to extend the look-back period from three years to five years.
This potentially affects many people seeking nursing home senior care paid for by Medicaid, perhaps leaving some individuals to consider other means of paying for senior living options.
Another rule that changed is the fact that the Medicaid look-back period previously started with the day you transferred your assets. Now it begins 60 months prior to the date the person applies for Medicaid.
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What Is The Medicaid Five Year Look Back Period
When one applies to Medicaid’s institutional care program, the file will be assigned to a Medicaid caseworker. The Medicaid case worker will review all transactions for the prior five years to determine whether any assets were given to any individual or entity for less than fair-market value . This review by the Medicaid case worker is referred to as the “look back period.”
If the caseworker finds transfers without value/gifts within that five-year period, a penalty period is assessed. The purpose of the Medicaid penalty periods to dissuade Medicaid applicants from giving away their assets for the sole purpose of qualifying for Medicaid. During the penalty period, Medicaid will not pay for the long-term care.
The DRA also amended the date when the Medicaid penalty period starts. Prior to the DRA, the penalty period began with the month in which the gifted asset was transferred. Now, the penalty period begins with the date of the asset transfer or the date the medicaid applicant enters the nursing home and otherwise qualifies for Medicaid, whichever is later!
Meeting Medicaid Disclosure Requirements
Failure to disclose gifting is not a permissible way to avoid the 5-year look-back. The agency is adept at reviewing financial records, and they will ask questions whenever they suspect more information is required.
All of the above transfers are exempt from the transfer penalties and are fully disclosed to the PA Department of Human Services during the application process if the transfers fall within the 60 months prior to the filing of an application for Medicaid long-term care benefits.
If you need to apply for Medicaid benefits now, you may realize gifts occurred within the look-back that you fear may cause problems during the Medicaid application process. In another article, we will discuss what to do when gifts have already occurred and you think its too late. There may still be help our office can provide to reduce or eliminate the Medicaid transfer penalty in your case. Give us a call and well see what we might be able to do to help.
If you have additional questions, contact Gerhard & Gerhard, PC to discuss your options.
Disclaimer: We recommend that you have ongoing legal advice from an elder law attorney before attempting to navigate the Medicaid application process. If you have questions or wish to secure our services, please contact Gerhard & Gerhard, P.C.
Still unsure, need more direction?
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What Is A Look Back Period
In order to successfully protect your assets and income from the high costs of nursing homes and home care, Medicaid planning should be done well in advance of needing such care. In New York, there is something called a look-back period for Medicaid eligibility.
Essentially, this means that if you funded a trust with your assets, spent your assets, or gifted your assets for the purpose of qualifying for Medicaids financial limits within the look-back period, those assets will be counted and you may not qualify for Medicaid assistance.
While home care Medicaid applications will be subject to a shorter look-back window, Medicaid applications for nursing home care will not be impacted by the new rules. These applications will continue to be subject to the five-year , look-back period.
How To Avoid Medicaid 5
Medicaid is one of the government safety nets that helps seniors pay for their care. Long-term care is a necessity for many seniors as they age and can be very expensive. Medicaid helps to pay for long-term care, but it requires that you exhaust your personal resources before payments begin. To prevent seniors from giving away money or resources to friends and family, Medicaid uses a 5-year lookback of their financial transactions. Attempting to hide money can lead to serious penalties. Heres how to avoid Medicaid 5-year lookback penalties.
Consider working with a financial advisor as you prepare for meeting your retirement expenses.
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New Medicaid Look Back Period In 2022
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While 2022 may be months away, it is extremely important that individuals looking to qualify for Medicaid or currently covered by Medicaid are aware of the new Medicaid Look Back Period several months in advance. The new Look Back Period was first scheduled to take effect in October 2020, and after several push backs is finally scheduled to take effect on January 1, 2022. The delay allows local Medicaid programs to train staff in preparation for this pivotal change. Additionally, the 2020 Families First Coronavirus Act prohibits states from reducing eligibility for Medicaid during the pandemic.
Changes in the Look Back Period
Calculating the Look Back Period
Exceptions to the Transfer Penalty
Transfer of a Home to:
Transfer of Property Other Than a Home to:
The Medicaid Penalty Period
The general rule is that if a senior applies for Medicaid, is deemed otherwise eligible but is found to have gifted assets within the five-year look-back period, then they will be disqualified from receiving benefits for a certain number of months. This is referred to as the Medicaid penalty period.
For example, if you write a check to your adult son for $20,000 and apply for Medicaid long-term care within five years of the date on the check, then Medicaid will delay covering the cost of your nursing home care because you could have used that money to pay for it yourself. Note that the clock for the penalty period begins running on the date a senior applies for Medicaid coverage, not the date on which they gifted the money.
The length of the penalty period depends on the total amount of assets an applicant transferred and their states unique penalty divisor. The penalty divisor is the average monthly cost of a nursing home in a particular state. These figures are published annually by each states Medicaid program.
For instance, in Florida, the monthly penalty divisor is $ 9,703 in 2022. Meanwhile, for an applicant in Long Island, N.Y., the monthly divisor is $14,012. Therefore, that $20,000 gift mentioned earlier would cause a penalty period of 2 months in Florida but just over a one-month penalty period on Long Island .
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Are There Ways To Avoid Medicaid Look Back Period Penalties
There are several exceptions to penalties for transferring assets during the Medicaid look-back period. If your transferred asset is a home and you transferred title to your spouse, there is no penalty. If your child lived with you for at least two years before you enter the nursing home and that child provided care to you during that period so you could continue living at home, you also avoid the penalty. If you have a child under age 21 who is blind or totally and permanently disabled under state-specific guidelines or if you transferred the home to your sibling who has an equity interest in that home and lived there for at least a year prior to your entering a nursing home there is no penalty.
NOLO points out that other exempt assets include household goods, personal effects, one automobile and some pre-paid funeral plans.
When considering nursing home senior care and senior living, make sure you avoid improper transfer of assets and know other guidelines of the Medicaid look-back period.
Medicaid Planning: What Is The Medicaid Lookback Period
When an application for medicaid nursing home benefits is made, medicaid requires the applicant to disclose any gifts made by the applicant during a certain period of time leading up to the application. In Alabama, that period of time is 60 months . This 60 month period of time is commonly known as the medicaid lookback period. Any gifts or transfers of assets for less than market value made during the lookback period may result in a transfer penalty.
If a transfer penalty is assessed it comes in the form of a delay in medicaid benefits after the applicant is otherwise eligible . In other words, the applicant is eligible for medicaid nursing home benefits, but medicaid will not provide the benefits during the transfer penalty month or months. Alabama Medicaid calculates the transfer penalty period by dividing the total amount of gifts made by the average monthly cost for self pay in a long term care facility in Alabama. As of 2018, that number is $6,100. For example, if $12,200 worth of assets were gifted to family members during the lookback period, those gifts would result in a two month penalty period where medicaid would not provide benefits after the beneficiary has made an application and is otherwise eligible.
For more information about elder law and planning for medicaid nursing home benefit eligibility, please take a look at the elder law page and other articles in the blog.
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Look Ahead At Medicaids Look
Its never too soon to think about how you are going to pay for nursing home or assisted living care if the need arises one day for you or your spouse. In fact, the sooner you plan for this possibility, the more options there will be available to you. One such option could be applying for Medicaid to pay for some or all of your nursing home care.
Section I Program Description And Objectives
Goals and Objectives
In July 1997, New York State received approval from the Centers for Medicare and Medicaid Services for its “Partnership Plan” Medicaid Section 1115 Demonstration . In implementing the 1115 Demonstration, the State sought to achieve the following goals:
- Improve access to health care for the Medicaid population
- Improve the quality of health services delivered and
- Expand coverage to additional low-income New Yorkers with resources generated through managed care efficiencies.
In furtherance of these goals, the primary objective of the 1115 Demonstration was to enroll most of the States Medicaid population into managed care, and to use a managed care delivery system to deliver benefits to Medicaid recipients, create efficiencies in the Medicaid program and enable the extension of coverage to certain individuals who would otherwise be without health insurance.
The 1115 Demonstration was last renewed by CMS on December 7, 2016 and, at the time of renewal, the name of 1115 Demonstration was changed from the Partnership Plan to the New York Medicaid Redesign Team Waiver. Since the MRT Waivers renewal, this waiver has been amended to reflect programmatic needs. Under the waiver, the State is required to seek Federal approval of any amendments.
Proposed Implementation
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What You Should Know About The Medicaid Look
- During the Medicaid look-back period, administrators review applicants’ prior financial transactions. Learn how to avoid penalties when applying for benefits.
Because Medicaid was designed to provide health care benefits for low-income Americans, its eligibility criteria include strict income and asset limits. Applicants who need Medicaid coverage to pay for assisted living, skilled nursing or long-term care services may be tempted to give away their money or property in an attempt to qualify for the program. To prevent this, the federal government maintains a look-back period, during which Medicaid administrators may review prior financial transactions made by the applicant. Lets take a closer look at the Medicaid look-back period and what it means for you if youre applying for benefits.
Transfers For The Benefit Of The Spouse
Transfers to a spouse are not penalized by Medicaid because assets held in the name of either spouse are included when determining an applicant’s eligibility. In other words, Medicaid does not care which spouse owns the asset. Federal law provides that there is no transfer penalty if:
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The asset was transferred to the applicant’s spouse, or to another for the sole benefit of the applicant’s spouse, or
- The asset was transferred from the applicant’s spouse to another for the sole benefit of the applicant’s spouse.
This means that an institutionalized spouse is allowed to transfer unlimited assets to his or her spouse, or to someone else for the sole benefit of his or her spouse . “Sole benefit of the spouse” means that no one besides the spouse can benefit from the assets in any way, now or at any time in the future.
Also, federal law states that any assets transferred to another “for the sole benefit of the spouse” must be spent for the benefit of the spouse within a time-frame corresponding to the spouse’s life expectancy. In other words, the trust or annuity must be to set up to spend the assets or money for the spouse’s needs in a way that it will run out by the time the spouse dies.
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