Some people who age will need to move into a nursing home for care. Not everyone has the financial backing for this, so many of them will rely on Medicaid and other programs to help them cover the cost of long-term care.
One thing that some individuals might not realize is that there are strict requirements in place for those who need to get Medicaid assistance. There are income and asset limits to ensure that only those who truly need help receive these benefits.
A person who applies for Medicaid is subject to the look-back period. This is a time when transferring, selling or gifting assets can count against the applicant.
How does the look-back period work?
In Massachusetts, the look-back period is five years. With very few exceptions, anything that’s sold or given during this time will count against the benefits that the applicant should receive. The value of the assets or the amount of the sale are important for this. Everything is added up. The total of those assets is divided by the amount of the monthly Medicaid contribution for the long-term care facility. The applicant is then penalized by that number of months.
For example, a person who sold or gave away assets totally $15,000 would be penalized a three-month period if the long-term care facility contribution of Medicaid is $5,000 per month. The Medicaid coverage will begin once the penalty period is over.
Why is the look-back period important?
Medicaid coverage is based on a financial need, so it would be possible for people to give away or sell assets right before applying if there wasn’t a look-back period. The look-back period means that people can’t suddenly decide to take those actions just because they know that they’ll need Medicaid coverage and want to ensure they qualify for it.
The look-back period means that people who may need Medicaid coverage one day should start planning how to handle their assets early. By taking the time to set the plan in motion well in advance of needing Medicaid, most people should be able to reduce the penalties they’ll have to face.