Long-Term Care Planning: Beware the Five-Year Look-Back!

Clients often approach us as elder law attorneys explaining that their elderly loved-one needs to go into a nursing home. Because of the prohibitive expense of such care, they want governmental assistance to pay for the care. Specifically, they want to qualify for the Managed Care Long-Term Care Program offered through Medicaid. 

In order to qualify, the person seeking Medicaid assistance must qualify medically, must have certain income limits and certain resource (or asset) limits. Most often, the resource limits are what present the toughest challenge. Summarized in simple terms, a single person may only have $2,000 in "countable assets" and a married couple may only have $117,000 in such assets if only spouse needs to be in a nursing home).  

Often, the elderly person (or their family) has already attempted to "pre-plan" qualification by transferring or "gifting" away some or most of their assets. In meeting with an elder attorney, they find out that this transfer can actually delay qualification. The reason for this is what is known as the "five-year look-back." In applying for Medicaid long-term care assistance, state authorities will "look back" five years to determine if transfers or gifts have occurred. For every $5,000 gifted within the five years, the person will not qualify for Medicaid assistance for one month. 

For example, take a single elderly person who has $100,000 in cash and anticipates needing to go into a nursing home. If that person were to transfer the cash to their children within the five-year look-back period, they would not qualify for Medicaid assistance for approximately 20 months. In other words, one month delayed qualification for every $5,000 transferred. 

This doesn't mean the person cannot go into a nursing home--it means that Medicaid won't pay for it until the 20-month period expires. Essentially, the person will have to "self-pay" until the delay period has run.

Obviously, if an elderly person may need to go into a nursing home, they should seek advice from an elder law attorney before taking any steps.

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