How Does the Medicaid Look-Back Period Work?

When someone applies for Medicaid, there is a resource limit regardless of why they are applying. If that applicant has more resources than the current limit, they will not be approved for Medicaid benefits. The government imposed a lookback period to prevent applicants from transferring money or other assets out of their name before applying for Medicaid. The lookback period is five years. All transfers or gifts made during the lookback period are reviewed, and if an applicant is found to have transferred assets or sold them for less than market value, a penalty period will be assessed. The idea behind the lookback period is that transferred or gifted assets could have been used to pay for the applicant’s care rather than allowing the government to foot the bill.

For example, if you were to apply for Medicaid benefits on December 8, 2022, Medicaid would review all of your financial transactions between December 7, 2017, and the date of your application.

All kinds of payments or transfers can run afoul of the Medicaid asset transfer rules, for example:

  • Gifting money to a child for their college education;
  • Transferring the title to a home to a grandchild;
  • Paying a housekeeper, gardener, or another service worker without a formal agreement;
  • Selling a valuable collection of artwork to a stranger for less than market value; or
  • Donating money or assets to charity.

Additionally, the lookback period remains effective once the applicant is approved for benefits. Thus, if someone qualifies for help and then comes into a substantial sum of money, they violate the lookback period if they transfer some of those assets to avoid benefit ineligibility.

The duration of the Medicaid penalty period depends on the number of assets transferred or gifted. In 2022, the transfer penalty in Pennsylvania is one day of ineligibility for every $482.50 that was given away or transferred. This is known as the 2022 daily penalty divisor, representing the average cost of one day’s care in a Pennsylvania nursing home. The state government adjusts the penalty divisor each year based on inflation.

Planning for Medicaid eligibility, either for yourself or a loved one, can be an overwhelming experience. However, you do not have to go through this complicated process alone. At the Hazen Law Group, we work with people from all walks of life with diverse backgrounds, financial needs, hopes, and goals. Our team of experienced Medicaid planning attorneys understands that your family’s needs are unique, and we will cater our discussions and recommendations accordingly. The founder of Hazen Law Group, Marielle Hazen, has been named one of the Best Lawyers – and the Hazen Law Group, one of the Best Law Firms – in the country by U.S. News and World Report for several years. To learn more about how we can help you plan for your future and that of your family, call 717-540-4332 to schedule a consultation with one of our compassionate attorneys today.

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