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

Summary
Applicants have to meet an asset limit to qualify for Medicaid Long Term Care. To make sure they haven’t simply given away any assets to meet the limit, Medicaid uses the Look-Back Period. In most states, the Look-Back Period is 60 months (five years), which means the state will look back into the applicant’s financial history for the 60 months prior to their application to see if they have given away any assets or sold them at less than fair market value.

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

The Look-Back Period is a tool states use to ensure Medicaid applicants are truly in need of the program, which is meant for individuals with limited financial means. Applicants have to meet an asset limit to to qualify for Medicaid Long Term in a nursing home, their own home or other settings. In most states in 2025, the individual asset limit is $2,000. To make sure applicants don’t just give away assets to meet that limit, or sell them at less than fair market value, states will “look back” into the applicant’s financial history for the 60 months prior to their application date. That 60 months, or five years, is the Look-Back Period.

The only state exceptions to the 60-month Look-Back Period length are California and New York. There is also one Medicaid Long Term Care program that doesn’t use the Look-Back Period. These exceptions are detailed in the next section.

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, and it will also 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. The Look-Back Period 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 and penalize the applicant for giving away assets in that time frame.

The state exceptions to the 60-month 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 starting Jan. 1, 2024, there has been 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, 2025, the state will not look back into any month in 2025 or 2024 (a total of 14 months in this case), but it will look back into the 16 months prior to Jan. 1, 2024, to fulfill the 30-month Look-Back Period. California’s Look-Back Period will eventually be phased out completely by July 2026.

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

While these are some of the most common Look-Back Period violations, they aren’t the only ones. Below are more transactions that could violate the Look-Back Period and lead to an application being denied and the applicant receiving a penalty period of ineligibility:

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 care and the applicant is making any kind of payments for the care, whether it be cash or assets like a car or a rent-free apartment, the applicant could be in violation of the Look-Back Period unless the payments are documented with a Personal Caregiver Agreement.

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, your application will be denied and you will face a penalty period of ineligibility that could last months or years. During that penalty period, one can not reapply for Medicaid.

The length of the penalty period depends on the value of the violating assets and the state’s “penalty divisor.” The penalty divisor is the average monthly cost of private pay nursing home care in the state. Essentially, the value of the violating assets is divided by the penalty divisor to calculate the length of the penalty period. To find out the penalty divisor in your state and learn more about Look-Back Period penalties and violations, go to this webpage sponsored by the American Council on Aging. is calculated using the state’s “penalties divisor,” which varies depending on the state.

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

There are some ways to transfer assets without violating the Look-Back Period. Some of these methods can be used by people who are over their asset limit and want to reduce their assets in order to become eligible. Before attempting to use any of these methods on your own, however, it’s recommended that one consult with a professional, like a Certified Medicaid Planner or Elder Law Attorney.

Spend Down: You can spend money on yourself or your spouse to lower your assets without violating the Look-Back Period. Medicaid “spend down” can include things like paying off debt, taking a vacation or making home modifications. Spending on anyone else violates the Look-Back Period, including paying for a grandchild’s education or giving a relative a car. You should also avoid buying non-essential items, like a second car or jewelry, that can be counted as an asset.

Home Transfer: Homeowners can transfer their home to a qualified adult child or sibling without violating the Look-Back Period by using the Child Caregiver Exemption or the Sibling Exemption. The adult child child is qualified if they have lived in the home for at least two years prior to the start of Medicaid long-term care benefits and during that time they provided their parent with care that prevented the need for Medicaid long-term care. Siblings are qualified if they have lived in the home for at least one year prior to the start of Medicaid benefits and they have partial ownership of the home.

Medicaid Compliant Annuities: Purchasing a Medicaid Compliant Annuity can reduce an applicant’s assets without violating the Look-Back Period, and it can provide the senior with a needed income stream. However, the income from the annuity will be counted toward the applicant’s Medicaid income limit, which is $2,901/month for an individual in most states in 2025.

Community Spouse Resource Allowance (CSRA): Medicaid considers the assets of married couples to be jointly owned, but there is an exception for married applicants with just one spouse applying. The asset limit for the non-applicant spouse is $157,920 in most states in 2025, thanks to the Community Spouse Resource Allowance, while the asset limit for the applicant spouse remains $2,000. So, the applicant can “transfer” up to $157,920 of the couple’s assets to their non-applicant spouse and still be eligible.

Can You Enroll in Medicaid After Violating the Look-Back Period?

If you’ve applied for Medicaid and the state has found you have violated the Look-Back Period, it is still possible to enroll. The first step would be contacting a Certified Medicaid Planner, who will know the specific procedures in your state. They may include one of the following options:

Asset Recuperation: If the Look-Back Period violation is for selling an asset at less than fair market value and the applicant can recuperate the asset, the state may not penalize the applicant with period of ineligibility. And some states allow for partial recuperation resulting in a shorter penalty.

Undue Hardship: If the health or well-being of the applicant who has violated the Look-Back Period will be at risk without Medicaid benefits, the state may grant an undue hardship waiver and provide Medicaid benefits despite the Look-Back violation. 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