Medicaid’s Look-Back Period: Rules, Exceptions & Penalties

Summary
To be eligible for Medicaid Long Term Care in a nursing home, their own home, or any other setting, applicants must meet specific financial asset and income limits. To make sure an applicant hasn’t just given away assets or income to meet the limits, Medicaid officials will check their finances over a specified amount of time, usually going back 5 years. This is called the Medicaid Look-Back Period, and it can be a complicated process, with many factors coming into play.

 

What is the Look-Back Period for Medicaid Long Term Care?

The Look-Back Period is a tool states use to make sure Medicaid applicants are truly in need of the program, which is meant for individuals with limited financial means, and haven’t just given away resources in order to become eligible. Eligibility requires that applicants meet an asset limit ($2,000 in most states as of 2024) and an income limit ($2,829/month in most states as of 2024).

The Look-Back Period in most states is 60 months, or 5 years. The only exceptions as of 2024 are California and New York. The next section will provide more details about the three types of Medicaid Long Term Care programs and the Look-Back Period lengths for California and New York.

 Warning: The penalty for violating Look-Back Period rules is a longer wait time for approval of benefits. The length of that period of ineligibility depends on a number of factors described below.

 

Does the Look-Back Period Apply for All Types of Medicaid Long Term Care?

There are three types of Medicaid Long Term Care relevant to seniors – Nursing Home Medicaid, Home and Community Based Service (HCBS) Waivers and Aged, Blind and Disabled (ABD) Medicaid. Nursing Home Medicaid covers all the costs associated with nursing home care, including room and board. HCBS Waivers provide long-term care benefits in in the homes of recipients who would otherwise have to go to a nursing home. ABD Medicaid is healthcare coverage for all aged people with limited financial resources, regardless of their medical condition, but it will provide long-term care benefits for recipients who show a medical need for them.

The Look-Back Period only applies to Nursing Home Medicaid and HCBS Waivers. It does not apply to ABD Medicaid. However, ABD applicants should be cautious about giving away their assets. They might need Nursing Home Medicaid or an HCBS Waiver within the next five years, and those programs would deny or penalize the applicant for giving away assets in that time frame.

The only exceptions to that five-year time frame for the Look-Back Period, as mentioned above, are New York and California. In New York, the Look-Back Period is the standard 60 months for Nursing Home Medicaid, but there is no Look-Back Period for New York’s Community Medicaid, which is similar to HCBS Waivers in other states. There is also no Look-Back Period for New York’s DAB Medicaid, which is what New York calls its ABD Medicaid program, so this is like all other states.

In California, there is no Look-Back Period for HCBS Waivers (or ABD Medicaid, just like in all states). The Look-Back Period is 30 months for Nursing Home Medicaid, but as of Jan. 1, 2024, there is no asset limit for any California Medicaid Long Term Care program, which means the state will not look into any of the applicant’s financial history after that date. However, transactions before Jan. 1, 2024, are still subject to a 30-month Look-Back Period.

For example, if a California senior applies for Nursing Home Medicaid on March 1, 2024, the state will not look back into the first two months of 2024, but it will look back into the 28 months prior to Jan. 1, 2024, which would go back to Sept. 2021. If someone applies on Jan. 1, 2025, the state will not look back into the 12 months of 2024, but it will look back into the 18 months of financial history before that to make sure no assets were given away or sold at less than fair market value. California’s Look-Back Period will eventually be phased out by July 2026.

 

What Financial Transactions Violate Medicaid’s Look-Back Rules?

 Example Transactions that May Violate Look-Back Rules
The following are examples of financial transactions that may be Look-Back Period violations. Anyone who applies for Medicaid and has done any of these things over the previous five years is in danger of being denied benefits:
– Giving large sums of money as a gift (including educational gifts to grandchildren)
– Transferring ownership of a home
– Donating a vehicle
– Selling items for less than market value
– Any of the above activity by the applicant’s spouse

These are some of the most common ways applicants for Medicaid Long Term Care have been ruled in violation of Medicaid’s Look-Back rules. Remember, since Look-Back Period rules are complicated, applicants are encouraged to seek the help of a Certified Medicaid Planner.

Large Gifts: The IRS allows a person to gift as much as $15,000 to someone else without being taxed on that gift. However, just because it’s not taxed does not mean the sum isn’t violating the Look-Back Period. Even cash that’s meant as a present for something like a graduation can be a Look-Back violation that will result in a denial of Medicaid benefits.

Not Getting a Receipt or Bill of Sale: Medicaid offices use Look-Back Periods to make sure assets have not been sold for less than they’re worth, so assets sold for fair market value are usually not in violation. However, if the applicant failed to properly document a sale during the Look-Back Period, especially for something that must be registered like a vehicle, this would probably be considered a violation that might cause a denial of benefits.

Medicaid Qualifying Trusts: The name suggests these trusts would be allowable during the Medicaid Look-Back Period, but they are actually considered a gift and would be in violation of state rules. Medicaid Qualifying Trusts, or Irrevocable Trusts, transfer assets including stocks, property, cash, annuities and/or certificates of deposit from an individual to a third-party trustee for holding. These trusts must be made before the Look-Back Period begins, however, in order to be allowable under Medicaid rules.

Paid Caregiving from a Family Member: If a family member is providing paid caregiver support, the payments must be properly documented with a Personal Caregiver Agreement, or this would put an applicant in violation of Medicaid’s Look-Back rules.

 Violating Look-Back While on Medicaid
One can violate Medicaid’s Look-Back rules if they come into money after being approved for Medicaid benefits. If one inherits money and then gives it away, for example, it may violate state Medicaid rules and they would risk losing benefits. In this situation, it is recommended one consult with the state Medicaid offices or a Certified Medicaid Planner to make sure they aren’t violating the program’s rules.

 

What is the Penalty for Violating Medicaid’s Look-Back Period Rules?

If you apply for Medicaid Long Term Care and are found to have violated the Look-Back Period rules, the penalty is a certain number of months, or years, of Medicaid ineligibility. The length of that penalty is calculated using the state’s “penalties divisor,” which varies depending on the state.

Many states take the dollar amount of the violating assets and divide it by the average monthly cost of care in the state to determine the length of the penalty for violating the Look-Back Period. The penalty divisor can be complicated, however, so it’s advisable to consult with a Certified Medicaid Planner to find out specifics for your situation.

 

What Financial Transactions Are Exempt From Medicaid’s Look-Back Period?

There are a few ways to transfer assets that will get an applicant under Medicaid financial limits without breaking the Look-Back Period rules. Before doing this, however, consult with a Certified Medicaid Planner or elder law attorney who understands the nuances of rules, particularly in one’s state of residence.

Community Spouse Resource Allowance (CSRA): For married Medicaid applicants, a portion of the couple’s assets can be transferred to the well spouse, or even all assets as long as they come in under the state CSRA limit (which is $154,140 in most states as of 2024). CSRA rules are complicated and can be very different from state to state. To learn more about the CSRA, click here.

Transfer of a Home: Ownership of a home may be transferred from the Medicaid applicant in order to get under the asset limit using the Sibling Exemption, but only if the sibling has partial ownership and has lived in that home for one year prior to the applicant moving into a nursing home. A home may also be transferred to a grown child who worked as the applicant’s caregiver using the Child Caregiver Exception, as long as the adult child has lived with the parent for at least two years before the move into full-time nursing care.

 

Can One Get on Medicaid if the Applicant has Violated Look-Back Rules?

If one has income or assets above the Medicaid limits or knows they have violated the Look-Back Period and will face a penalty, it is still possible to be approved for Medicaid Long Term Care benefits, including Nursing Home Medicaid and HCBS Waivers. First, consult a Certified Medicaid Planner, who will know exactly which steps and the nuances of your state’s rules.

Asset Recuperation: If the applicant has sold something for under fair market value during the Look-Back Period, it is possible to recover the asset to avoid a penalty and the ensuing delay in eligibility. Some states allow for partial recuperation resulting in a shorter penalty.

Undue Hardship: Someone who has violated the Look-Back Period and cannot recuperate assets may still appeal to state Medicaid officials (depending on the state) and claim that without Medicaid they will not be able to live with adequate food, clothing or housing. Undue Hardship waivers are rare, and it must be clear and certain that without Medicaid the applicant will not be adequately cared for.

 

Table: Medicaid Long Term Care Look-Back Periods by State and by Medicaid Program

 

Length of Medicaid Look-Back Period by State and Type of Medicaid
State Nursing Home Medicaid HCBS Waivers
Alabama 60 months / 5 years 60 months / 5 years
Alaska 60 months / 5 years 60 months / 5 years
Arizona 60 months / 5 years 60 months / 5 years
Arkansas 60 months / 5 years 60 months / 5 years
California No Look-Back 30 months / 2.5 years
Colorado 60 months / 5 years 60 months / 5 years
Connecticut 60 months / 5 years 60 months / 5 years
Delaware 60 months / 5 years 60 months / 5 years
Florida 60 months / 5 years 60 months / 5 years
Georgia 60 months / 5 years 60 months / 5 years
Indiana 60 months / 5 years 60 months / 5 years
Iowa 60 months / 5 years 60 months / 5 years
Kansas 60 months / 5 years 60 months / 5 years
Kentucky 60 months / 5 years 60 months / 5 years
Louisiana 60 months / 5 years 60 months / 5 years
Maine 60 months / 5 years 60 months / 5 years
Maryland 60 months / 5 years 60 months / 5 years
Massachusetts 60 months / 5 years 60 months / 5 years
Michigan 60 months / 5 years 60 months / 5 years
Minnesota 60 months / 5 years 60 months / 5 years
Mississippi 60 months / 5 years 60 months / 5 years
Missouri 60 months / 5 years 60 months / 5 years
Montana 60 months / 5 years 60 months / 5 years
Nebraska 60 months / 5 years 60 months / 5 years
Nevada 60 months / 5 years 60 months / 5 years
New Hampshire 60 months / 5 years 60 months / 5 years
New Jersey 60 months / 5 years 60 months / 5 years
New Mexico 60 months / 5 years 60 months / 5 years
New York 60 months / 5 years No Look-Back (until at least 2025)
North Carolina 60 months / 5 years 60 months / 5 years
North Dakota 60 months / 5 years 60 months / 5 years
Ohio 60 months / 5 years 60 months / 5 years
Oklahoma 60 months / 5 years 60 months / 5 years
Oregon 60 months / 5 years 60 months / 5 years
Pennsylvania 60 months / 5 years 60 months / 5 years
Rhode Island 60 months / 5 years 60 months / 5 years
South Carolina 60 months / 5 years 60 months / 5 years
South Dakota 60 months / 5 years 60 months / 5 years
Tennessee 60 months / 5 years 60 months / 5 years
Texas 60 months / 5 years 60 months / 5 years
Utah 60 months / 5 years 60 months / 5 years
Vermont 60 months / 5 years 60 months / 5 years
Virginia 60 months / 5 years 60 months / 5 years
Washington 60 months / 5 years 60 months / 5 years
Washington, D.C. 60 months / 5 years 60 months / 5 years
West Virginia 60 months / 5 years 60 months / 5 years
Wisconsin 60 months / 5 years 60 months / 5 years
Wyoming 60 months / 5 years 60 months / 5 years