Hi guys, so the five years lookback period for Medicaid is a real put in place to prevent the transfer of assets before applying for Medicaid essentially.
It’s a tool to prevent Medicaid fraud but it has some significant consequences for people who need long term medical care.
Usually the aging or someone going into a nursing home assisted living facility or something a bit more involved skilled care etc.
So what generally happens is at some point everyone gets old you either will pass away fairly early.
Something sudden or there’s a long term deterioration where you might need to go into a nursing home at the end of it.
When that Happens
Medicare doesn’t pay for it. Medicaid is meant to pay for long term care but only after assets are exhausted.
So what people tend to want to do is to take their assets and give those assets away in order to preserve those assets and keep them in the family that’s you know cash, cars, money, etc.
What Happens is the Five Year Lookback Period
But what happens is the five-year look-back period can bring down some pretty hefty penalties on someone who makes a transfer where they don’t receive fair market value.
So you made a transfer two years ago that you to your son or daughter and you’ve made that transfer so that the money would not have to be paid toward moistening home.
Or you just made that transfer just because you wanted to, you have a stroke today tomorrow whatever and that stroke leaves you in a position where you need skilled nursing care.
What Happens Then
Now what happens then is they go back through your transaction history over the last five years.
They see that there was this gift a large significant gift of money your son or daughter and they apply a Medicaid penalty.
Which is a period of time that you are not eligible to receive Medicaid benefits.
What They Expect You to Do
So what they expect you to do is to spend down all of your savings and then apply for Medicaid and be able to pay for a nursing home or skilled care that way.
The penalty means you can apply for Medicaid and you still have to pay a nursing home.
The worst-case scenario is you take all of the assets you have you give them all away and then up in a nursing home the next day.
If that happens you’ve got a situation where you’re not eligible for Medicaid you may not be able to get top-notch care or the care you want.
Because you can’t afford it because you’ve given away all of your assets as it is.
So the five-year look-back period is essentially a tool used to prevent abuse of the Medicaid system but it also can cause some significant problems when people are caught unaware of that particular five-year look-back rule.
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