Federal Medicaid Lookback Rules
- Medicaid offers aid to pay medical bills for Americans who fit various qualifications, including income levels. Medicaid will help with nursing-home bills, but only if your assets and your spouse's are low enough to qualify for the program. Traditionally, individuals would give away assets to family members to qualify. However, in 2005, Congress passed the Deficit Reduction Act, which tightened the rules to make that process harder.
- The look-back rule states that if you made financial gifts to family up to five years before going into the nursing home, Medicaid will impose a delay before you can get help with nursing-home costs. Estate-law attorney Mark Freeman says it doesn't matter if the gift was intended to qualify you for Medicaid or not; even if you gave your grandchildren money for college tuition or paid for your daughter's honeymoon trip to Paris, Medicaid will still apply the penalty.
- Iowa State University says the penalty is based on dividing the value of the gift by the average monthly cost of nursing-home care in your state. If you made a $50,000 gift and the average cost is $5,000, the penalty would last for 10 months.
- Until 2005, the penalty period started when you made the gift: If you made the $50,000 gift two years before you entered a nursing home, the penalty phase would have expired by the time you needed Medicaid. Under the Deficit Reduction Act, the penalty clock starts ticking when you go into the nursing home, so you'd have 10 months to pay out of your own pocket before you could receive Medicaid help.
- Giving money or property to family is a common tactic to keep it out of probate, but estate-law attorney Steve Weisman says those gifts would also affect Medicaid eligibility. Weisman recommends that as part of your estate planning, you look at other solutions to avoiding probate, such as putting your house in an irrevocable trust for your heirs. This would also eliminate it from consideration when Medicaid totals your other assets.