Giving money or property to a family member may seem like a simple decision at the time, but it can affect your Medicaid eligibility years later. The five-year look-back period allows Medicaid to examine certain transfers before you apply for long-term care coverage. Here is what you need to know.
Medicaid reviews certain past asset transfers
The five-year look-back period allows Medicaid to review certain transfers you made during the 60 months before you apply. The review generally focuses on assets you gave away or transferred for less than fair market value. That includes giving money to a family member without receiving something of equal value in return. These transfers can matter even if you made them well before you began thinking about long-term care.
Certain transfers can delay your coverage
A transfer that violates Medicaid’s rules can trigger a penalty period that delays coverage for long-term care. Medicaid calculates the penalty based on the value of the assets you transferred and the rules that apply to your situation. As a result, you may qualify for Medicaid in other respects but still have to wait before coverage for long-term care begins.
Plan before making major transfers
You should understand how a major transfer could affect your eligibility before giving away assets or changing ownership. If long-term care may become a concern, speaking with an estate planning or elder law attorney can help you understand how the timing and details of a transfer may affect your options. Knowing the rules before you act can help you make decisions that still work for the future you are trying to plan for.